By Michael Nienaber
BERLIN (Reuters) - German industrial production fell by less than expected in March and trade proved resilient, data showed on Tuesday, supporting robust growth expectations for the first quarter.
The reports followed by a day data showing Germany industrial orders rose for the second consecutive month in March, the first time since 2015.
Germany's quarterly economic growth, to be released on Friday, is now expected to pick up to 0.6 percent in the first quarter from 0.4 percent in the final three months of last year.
Industrial output edged down by 0.4 percent on the month, Tuesday's data from the Economy Ministry showed. This was better than the consensus forecast in a Reuters poll for a drop of 0.6 percent.
The decline was driven by a 2.5 percent fall in energy output. Manufacturing production was down 0.5 percent while construction output rose 1.5 percent.
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The February reading was revised down to a rise of 1.8 percent from a previously reported increase of 2.2 percent. In January, industrial production rose by 1.3 percent.
In the first quarter as a whole, industrial production rose 1.4 percent on the quarter, the ministry said.
The Economy Ministry said the industrial upswing in the first quarter had momentum. "Industrial orders and sentiment indicators suggest a continuation of this positive trend," it said.
"All in all, despite the small drop in March, industrial production should have returned as a growth driver for the German economy," ING economist Carsten Brzeski said.
While construction remains a strong source of economic growth, industrial production and investments are set to finally catch up with the rest of the economy, he added.
Separate data released from the Federal Statistics Office showed that seasonally adjusted exports rose by 0.4 percent on the month to hit a record high of 105.4 billion euros. This came in better than the consensus forecast in a Reuters poll for a rise of 0.2 percent.
Imports jumped by 2.4 percent also to hit the highest value recorded in a month of 85.8 billion euros. This was much stronger than a predicted increase of 1.0 percent.
The seasonally adjusted trade surplus narrowed to 19.6 billion euros ($21.41 billion) from a revised 21.2 billion euros in February, below the Reuters consensus forecast of 20.9 billion euros.
"Germany is clearly benefitting at the moment from the revival of the global economy. And Germany still seems to have the right products, such as cars and machines, which are in demand all over the world," Sal. Oppenheim analyst Ulrike Kastens said. "But these good figures will increase the pressure on Germany to reduce the high trade and current account surpluses."
The overall robust readouts were the latest in a batch of solid economic figures and will help centre-right Chancellor Angela Merkel burnish her economic credentials ahead of a Sept. 24 federal election, when she will seek a fourth term.
The figures also underline the strength of the economy compared to its peers. German Foreign Minister Sigmar Gabriel has urged Merkel's conservatives to adopt a less rigid stance in fiscal policy towards France after the election of the pro-reform centrist Emmanuel Macron as president.
($1 = 0.9156 euros)
(Editing and graphic by Jeremy Gaunt)