German industrial production rebounded sharply in January, following a contraction in the previous two months.

Industrial output in the eurozone’s largest economy rose by 1.8 percent in January compared with revised figure of 0.6 percent decline in December last year, said the ministry of economics and technology on Wednesday.

Markets had expected that German industrial output to expand by 1.7 percent in January.

“Polls show that industrial companies are in the best of moods. They are already operating at full capacity, their order books are comfortably filled and their production remains on a clearly upward trend,” the ministry said.

The rebound in industrial production was mainly led by a strong increase in output of building sector, which surged 36.3 percent in January.

The output of building industry slumped 24.2 percent in December last year, as the sector was hit by a bitter cold winter.

The federal ministry said on Tuesday that factory orders in Germany rose by 2.9 percent in January, showing signs that economy was picking up broadly.