German domestic demand bolstered growth in final quarter

Frankfurt - Domestic demand drove German growth in the fourth quarter as trade damped Europe’s largest economy.

Private and government spending contributed 0.2 percentage point each to growth, the Federal Statistics Office in Wiesbaden said on Thursday.

Net trade subtracted 0.4 percentage point from output, with a 3.1% increase in imports outpacing a 1.8% gain in exports.

Gross domestic product rose a seasonally-adjusted 0.4% in the three months through December, matching a February 14 estimate.

Germany’s performance in the fourth quarter suggests the economy is sturdy enough to cope with challenges that may arise from national elections, Brexit, and a more protectionist US administration.

Unemployment is at a record low and business confidence is rising, and the Bundesbank has cited a "very dynamic" order intake as a factor driving future momentum.

A 1.6% surge in construction added 0.2 percentage point to fourth-quarter growth, the statistics office said. Private consumption expanded 0.3%, and government spending was up 0.8%.

The government recorded a surplus of €23.7bn in 2016, the statistics office said. That’s the highest since the country’s reunification and equals 0.8% of GDP.

Purchasing Manager’s Indexes published on Tuesday showed not only Germany’s economy continued its firm upward trend in February.

The euro-area recovery also become more broad-based as French output surpassed Germany’s for the first time since 2012. Both national and regional gauges exceeded economists’ expectations.