German economy buoyant

mercedesThe German economy boasted its strongest growth in two years.

The first quarter performance exceeded predictions and was driven forward by domestic spending.

Gross domestic product increased by 0.7% in the period January to March, the federal statistics agency Destatis said in a statement.

This followed on from 0.3% expansion in the preceding quarter.

"Positive stimulus resulted primarily from domestic demand," the agency said.

"Private households and the government increased their spending and investments were also higher."

The construction sector benefitted from mild weather.

But the demand for imports also rose and, at the same time, exports tapered off which caused the overall trade surplus to fall, according to Destatis. The overall growth more than offset the decline in net exports.

Employment increased in Germany by 180,000 in the first quarter. The rate was the quickest since before the financial crisis rained down in 2008.

As many as 3.8 million metal and electronic workers are in line for a payrise of 4.8% over the next 21 months. The union deal is similar to one reached two weeks ago for 2 million public sector workers.

Growth for the eurozone as whole was revised down marginally from 0.6% to 0.5% by the EU’s statistics arm, due to slowdowns in Greece and Poland countered by modest growth in Portugal and Italy.