Domestic demand fuels German economy's revival
Domestic demand helped the German economy return to growth in the first quarter as manufacturing remained a drag.
Europe's biggest economy expanded 0.4% in the three months to March compared to the previous quarter and by 0.6% from a year earlier, Destasis figures showed.
The final figures confirmed an earlier estimate that showed Germany's economy bouncing back after flirting with recession at the end of 2018. The country's export-led economy has been hit by trade disputes and problems in its large car-manufacturing industry.
Destasis's more detailed account of economic activity showed the increased role played by domestic private consumption in keeping the economy growing. Household consumption rose 1.2% from the fourth quarter - the highest figure since 2011. Government consumption declined 0.3%.
Business investment also supported growth as spending on machinery and equipment rose 1.2% with construction spending rising 1.9%. External demand was surprisingly high as provisional figures showed exports up 1%.
Manufacturing was the only sector where the value of goods produced fell, dropping 2.4%. The highest growth was in construction where the value of goods rose 4.6%.
Carsten Brzeski, chief economist at ING Germany, said the figures were good but that there were still plenty of potential clouds hanging over the German economy.
He said: "The German economy has once again demonstrated that it should never be written off … As much as today’s data are balm for the soul, there is no reason for complacency. The ongoing trade conflict between the US and China is a clear headwind for the already battered export sector and higher oil prices could undermine the current strength of domestic demand, possibly denting consumer spending and putting additional pressure on corporate profit margins."