German growth to pick up in first quarter
An unexpected jump in industrial orders in December points to increased exports.
"Powerful momentum can be expected from industrial activity above all," the Bundesbank wrote in its monthly report for February.
An unexpected jump in industrial orders in December points to increased exports, while firms will need to invest more in production equipment to meet the fresh demand, the report said.
"German car manufacturers stand out" with the key industry taking on "considerably more" orders at home, from eurozone neighbours and from non-euro countries, the central bankers wrote.
Meanwhile, a positive mood among consumers, more people in work than at any time since Germany's reunification in 1990, and higher wages all mean consumer spending will continue to support Europe's largest economy.
The Bundesbank nevertheless noted that there were some clouds on the horizon, with business surveys suggesting a gloomier outlook for the coming months and increased inflation in the eurozone which could cut into consumers' disposable income.
"It's unclear whether the more cautious business expectations reflect increased worries and uncertainty about possible restrictions on global trade," the Bundesbank wrote.
Export powerhouse Germany -- which in 2016 netted a trade surplus of some 253 billion euros ($270 million) -- can expect to lose out if protectionist trade rhetoric from US President Donald Trump evolves into policy.
Germany's economy grew 1.9 percent last year, its most powerful expansion since 2011.
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