(Bloomberg) -- Consumers led Europe’s largest economy out of stagnation at the start of the year, as the biggest spending increase in almost eight years made up for a manufacturing slump and troubles plaguing automakers.

Helped by record-low unemployment and low inflation, German household spending climbed 1.2% in the first quarter, the most since 2011. Construction jumped 1.9%, capital investment gained 1.1%, while net trade contributed 0.2 percentage point as exports outpaced imports.

The economy grew 0.4% in the period. Economists see a slightly slower expansion this quarter as the construction boost probably won’t be repeated, manufacturing continues to suffer, and escalating global trade tensions could dent the export-heavy economy.

There’ll be more insight into the economy later on Thursday with the release of Purchasing Managers Indexes and the closely-watched Ifo business confidence gauge. The Bundesbank cautioned earlier this week against reading too much into the first-quarter performance, saying the underlying trend remains weak and the downturn in industry could even intensify.

The key concern is the flare-up in a trade conflict between the U.S. and China that the OECD says has put the the global economy on a low-growth track that’s clouded by risks.

Germany and the euro zone have so far managed to escape a direct hit from U.S. protectionism, but the region could still be dragged into the conflict, with significant consequences for Germany’s auto sector. President Donald Trump earlier this month delayed imposing tariffs on car imports from the European Union and Japan for 180 days, while saying they represent a threat to U.S. national security.

--With assistance from Kristian Siedenburg and Carolynn Look.

To contact the reporter on this story: Piotr Skolimowski in Frankfurt at pskolimowski@bloomberg.net

To contact the editor responsible for this story: Fergal O'Brien at fobrien@bloomberg.net

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