BERLIN (Reuters) - German industrial production fell by less than expected in March following two strong months while exports and imports both hit record-highs in March, data showed on Tuesday, suggesting Europe's biggest economy picked up steam in the first quarter.
In another sign for a continued upswing and improved labour demand, job vacancies hit an all-time high in the first three months of 2017.
The overall robust readouts are the latest in a batch of solid economic figures that are likely to help Chancellor Angela Merkel burnish her economic credentials ahead of a Sept. 24 federal election, when she will seek a fourth term.
Her gap with the main opposition Social Democrats has already been widening.
The economic numbers also underline the strength of the German economy compared with its peers.
Foreign Minister Sigmar Gabriel, a Social Democrat in Merkel's coalition, has urged her conservatives to adopt a less rigid stance in fiscal policy towards France after the election of the pro-reform centrist Emmanuel Macron as president.
"German exports had an impressive first quarter," BGA trade association head Anton Boerner said, adding that business with other European Union countries and overseas markets such as China and the Unites Stated China was flourishing.
"It is astonishing how the German economy is defying global risks, whether politically or economically," Boerner added.
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 in March, beating the consensus forecast for a drop of 0.6 percent, data from the Economy Ministry showed on Tuesday.
In the first quarter as a whole, industrial production increased by 1.4 percent on the quarter.
The Economy Ministry said the industrial upswing had gained momentum. "Industrial orders and sentiment indicators suggest a continuation of this positive trend," it added.
While construction remains a powerful source of growth, industry output and investments are set to finally catch up with the rest of the economy, ING economist Carsten Brzeski said.
"All in all, despite the small drop in March, industrial production should have returned as a growth driver for the German economy," Brzeski 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.
Imports jumped by 2.4 percent also to hit the highest value recorded in a month of 85.8 billion euros. This narrowed the seasonally adjusted trade surplus to 19.6 billion euros.
"Germany is clearly benefiting at the moment from the revival of the global economy," Sal. Oppenheim economist Ulrike Kastens said, adding that German firms still seemed to offer the right products, such as cars and machines, which are in demand all over the world.
The good trade figures will likely increase the pressure on Germany to reduce its high trade surplus. But higher public investment, as demanded by France and others, will not solve the problem alone, Kastens said. More private sector investment in equipment and machinery was also needed, she noted.
A survey by the IAB labour office research institute showed that job vacancies jumped by about 75,000 on the year to reach a record-high at 1.064 million.
Among the sectors consistently looking for more staff are logistics, healthcare and construction, IAB researcher Alexander Kubis said.
"The German economy seems to be unfazed by external risks such as a possible rise of protectionism and any consequences of Brexit. That's why firms continue to hire, they are looking for new employees to an extent never seen before," Kubis said.
The reports followed by a day data showing Germany industrial orders rose for the second consecutive month in March, the first time since 2015.
Editing and graphic by Jeremy Gaunt