By Michelle Martin
BERLIN (Reuters) - German imports climbed more sharply than exports in March and industrial output dipped, suggesting that Europe's largest economy might have grown less than economists expected in the first quarter.
The figures from the Federal Statistics Office contrasted with generally buoyant sentiment indicators and with news on Thursday that demand for goods made in Germany had climbed by 0.9 percent in March.
Gross domestic product (GDP) figures for the January-March period are due be published next Wednesday and economists have been forecasting a modest reduction in growth to 0.6 percent from the robust 0.7 percent registered in the last three months of 2014.
Carsten Brzeski, economist at ING, said the picture was "more mixed" than bullish sentiment indicators had suggested, given that net exports appeared to have been weak.
"This leaves the German economy only with consumption and strong activity in the construction sector as significant growth drivers for Q1 GDP growth."
Seasonally adjusted exports increased by 1.2 percent on the month in March, while imports rose by 2.4 percent, data from the Federal Statistics Office showed.
Economists polled by Reuters had predicted a 0.45 percent rise in exports and an unchanged reading for imports.
Meanwhile, industrial output fell by 0.5 percent, separate data from the Economy Ministry showed. Economists had been predicting a 0.4 percent rise.
The ministry said industry had a subdued start to the year, with crucial sectors such as engineering and automobiles lacking momentum.
Factories churned out fewer intermediate and capital goods. Increases in consumer goods production and construction activity were the only bright spots.
"Overall, industry has stagnated in the first quarter compared with the fourth quarter of 2014. Weak industrial production adds to signs that the headwinds for the German economy are increasing," said Marco Wagner, economist at Commerzbank (XETRA:CBKG).
Sentiment indicators have generally been strong of late, with business morale at its highest level in almost a year and consumers feeling more optimistic than at any point since late 2001. While the mood among investors has weakened, it remains strong.
While exports have traditionally propelled the German economy, they have suffered in recent years as demand from weakened euro zone trading partners faltered and crises abroad hurt business confidence.
Household spending was the key growth driver last year along with resurgent investment, though foreign trade did make a contribution to GDP growth after dragging on it in 2013.