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BERLIN, May 8 (Reuters) - German industrial output avoided a decline for the first time in seven months in March, helping to cement the belief that the severest post-war recession in the country's history is close to bottoming out.
Preliminary figures from the Economy Ministry on Friday showed that adjusted for seasonal swings, German industrial production was unchanged month-on-month in March, as a jump in construction activity offset a drop in manufacturing.
A Reuters poll of economists last week had forecast a drop in output of 1.5 percent in March.
"Today's production numbers offer some relief for German industry," said Carsten Brzeski, an economist at ING Financial Markets. "Still, a decade of growth has been erased by the current recession. Looking ahead, the green shoots are there."
However, the better-than-expected figures could not stop output suffering a record contraction in the first quarter.
In the January-March period, output fell 12 percent compared with the previous quarter, the biggest drop since reunification in 1990, according to the Federal Statistics Office.
Manufacturing output, which makes up the bulk of the index, fell by 0.4 percent month-on-month in March -- though production of capital goods was up by 2.5 percent. Construction output rose by 7.6 percent and energy production by 0.1 percent.
The Economy Ministry has said German gross domestic product likely shrank by around 3.5 percent during the first quarter, which would also be the biggest dip since reunification.
Germany, the world's biggest exporter of goods since 2003, is expected to suffer an economic contraction of around six percent this year, dragged down by a slump in exports.
This would be nearly seven times worse than Germany's previous worst performance in any year since World War Two.
Data from the Federal Statistics Office earlier on Friday showed German exports and imports posted their first rise in six months in March, raising hopes of better days to come.
"New orders, exports and now industrial production indicate that the worst is over. However, we are still a far cry from a return to output growth in Germany. This week was good but much more of the same will be needed," said Brzeski at ING.
(Reporting by Dave Graham; Editing by Andy Bruce)