DUESSELDORF/BERLIN, Germany (Reuters) - German Chancellor Angela Merkel’s conservatives defeated the ruling Social Democrats (SPD) in a key state election on Sunday, exit polls showed, boosting their hopes of retaining power in September’s national vote.

Merkel’s Christian Democrats (CDU) saw a surge in support in Germany’s most populous state of North Rhine-Westphalia (NRW), which is home to one in five German voters and has often been an indicator of national electoral trends.

The CDU won 33 percent, up from 26.3 percent in 2012, according to projections on public broadcaster ARD.

The CDU focused its campaign in NRW on attacking the SPD for failing to tackle local issues like crumbling infrastructure that causes huge traffic jams, rising crime and an underperforming education system.

But the conservatives, who have now defeated the SPD in three state elections since the end of March, are hoping to build on the momentum in the run-up to the federal vote on Sept. 24, where Merkel is seeking a fourth term.

Merkel’s image as an experienced leader who can provide stability resonates with many risk-averse Germans.

Western Europe’s longest-serving current leader, Merkel is seen by many in Germany and in the European Union as an experienced negotiator to guide tough talks with Britain on its exit from the bloc. She is also seen as a champion of free trade.

Merkel stood firm in the face of heated criticism at home and abroad for opening Germany’s borders in 2015 to more than one million mainly Muslim asylum seekers, a measure that hurt her popularity and contributed to the rise of the nationalist party Alternative for Germany (AfD).

Merkel’s credentials have also been enhanced by an economy that has grown every year since 2010, driven by a solid labor market, a booming construction sector, rebounding exports as well as increased state spending and private consumption.

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SCHULZ IMPACT FADES

The SPD, which has ruled NRW for most of the past half century, plunged to 31.5 percent from 39.1 percent, casting a shadow over their national election hopes.

The party had surged ahead of the CDU in the polls after it named former European Parliament President Martin Schulz as leader and candidate for chancellor in January. He vowed to roll back labor market reforms that increased the number of people in poorly paid jobs and to broaden social welfare.

But his message of “social equality” has lost much of its initial impact among voters who have been imploring him to spell out more concretely his plans and how much they would cost.

The SPD is 10 percentage points behind the CDU in national polls. The two parties currently rule together nationally in a “grand coalition”.

The liberal Free Democrats, the CDU’s preferred coalition partners, have bounced back to win almost 13 percent in NRW where the two allies are expected to have enough seats in the regional parliament to muster a majority. They would be hoping to replicate those results at the national level.

SPD state premier Hannelore Kraft quickly conceded defeat and said she would stand down as her party’s local leader, which analysts called an attempt to shield Schulz from the fallout.

“It’s clear that campaigning for the federal election is only just starting now,” Schulz told the ARD broadcaster after the results, which he called a “bitter defeat”.

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HOLDING THE CENTER

Analysts said the SPD’s biggest problem was that Merkel had managed over her 12 years in power to pull her conservatives to the center, making them attractive to left-wing and centrist voters who would otherwise vote SPD.

“Based on today’s results, the main problem for the SPD is clear: SPD voters from the center and center-left are seriously considering the CDU as a preferred option,” said Robert Vehrkamp of the Bertelsmann Foundation think-tank.

Merkel managed to revive her fortunes over the last two months with a victory in Saarland on March 26 and an upset defeat of the ruling SPD in Schleswig-Holstein a week ago.

Carsten Nickel, an analyst with Teneo Intelligence, said the NRW result was a sign that Merkel was on her way to re-election.

“The regional polls have vindicated Merkel’s decision to keep calm in the face of the 2015 migration crisis and the difficult election year 2016,” he said.

“It also confirms our earlier skepticism regarding the immediate effect of the SPD’s surprise nomination of Schulz. Merkel remains on track for a fourth term in the chancellery.”