The German growth engine looks like it lost some of its luster at the start of the year, but economists remain confident that the upswing in Europe’s largest economy will continue.

A decline in industrial production, exports and factory orders in January masks a strong underlying trend that feeds expectations that German growth will still be one of the drivers of euro-area expansion in 2018. While the weaker numbers follow a report showing a drop in business sentiment last month, that gauge is still close to a record high.

The Bundesbank has pointed to an “excellent order situation in industry” and “persistently good mood,” while warning at the same time that labor bottlenecks could become an obstacle for a further economic pickup. With record employment, companies are increasingly struggling to fill open jobs, and more firms are citing a shortage of workers as a factor limiting production.

“If we look at a really big picture, manufacturing sentiment is still really, really strong,” said Stephen Brown, an economist at Capital Economics in London. A softening of factory and services activity “is not really a concern but more of a natural response to the fact that the economy is probably facing some capacity constraints—so it still paints a very positive picture of German economy.”

Monthly Change Annual Change
Factory Orders -3.9% 8.2%
Industrial Production -0.1% 5.5%
Exports -0.5% 8.6%

The Economy Ministry, which publishes data on factory orders and industrial production, highlighted strong global growth, which will benefit German trade and manufacturing.

Yet, risks have increased. On Thursday, U.S. President Donald Trump delivered on a threat to slap import tariffs on aluminum and steel in what may be the first in a spiral of steps toward a trade war.

Separate German figures published Friday are unlikely to change Trump’s view of unfairness in global trade. The country posted a surplus of 17.4 billion euros ($21 billion) in January, continuing its non-stop streak of positive balances.

On Thursday, European Central Bank President Mario Draghi cited “rising protectionism” as a downside risk to the economic outlook in the 19-nation euro area. While the immediate impact on growth in the region may be small, sentiment may suffer from “dangerous” unilateral decisions, he said. Euro-area investor confidence is already at the lowest in almost a year.

Factories in Germany and the rest of the euro area have seen slower activity recently, with momentum also weakening in China and Japan.

“Some darker clouds have appeared in the German economic sky,” said Carsten Brzeski, chief economist at economist at ING-Diba in Frankfurt. But “at least for the near term, there is plenty of evidence that the German economy will power ahead.”