Angela Merkel appears to have emerged unscathed from her first challenge from a resurgent German left as her Christian Democratic Union (CDU) party romped to a surprisingly emphatic victory in state elections in the south-west.

Though Germany’s second-least populous state, state elections in the Saarland region are being treated as an important bellwether ahead of federal elections in September, with some commentators predicting the region could become the first in the old west of the country to be governed by a coalition between the centre-left and the left parties.

Instead, the ruling CDU state premier, Annegret Kramp-Karrenbauer, a centrist conservative in the Merkel mould, managed to increase her majority. The state broadcaster ZDF on Sunday night projected a 40.4% share of the vote for her, up five points on the last elections in 2012.

Meanwhile, the centre-left Social Democratic party (SPD), which has been energised by strong polling figures for its new candidate for the chancellorship, Martin Schulz, could not live up to expectations with a projected share of 30.4%, down 0.2% percentage points.

The Left party, led in the state by the veteran leftwinger Oskar Lafontaine, came third with 12.4%, while the Green party dropped out of the parliament altogether, making a left-leaning coalition government mathematically impossible.

Alternative für Deutschland (AfD), the rightwing populist party, sneaked into the state parliament for the first time with 5.9% but fell short of its leadership’s high expectations, gaining only three seats.

A continuation of the current “grand coalition” between the CDU and SPD, is therefore the only possible outcome of Sunday’s vote, in which 70% of the Saarland’s population turned out to vote, up from 61.6% five years ago.

“We have to recognise that the Saarland voted for a grand coalition,” conceded Frauke Petry, the AfD’s co-leader.

Martin Schulz, the SPD leader and former president of the European parliament, defended his party’s performance, pointing to polls in January that had predicted a mere 24% share of the vote: “We have made mighty gains, while support for the enemies of democracy has dropped off in ways that no one has expected.”

He rejected suggestions that the “Schulz effect” had evaporated at the first electoral hurdle. “In football terms, we have gone 1-0, but any match lasts at least 90 minutes,” he told ZDF.

“Of course, I had hoped that the people of the Saarland would send out a clear signal of their contentment with my work, and that they want me to continue my work in a grand coalition,” said a triumphant Kramp-Karrenbauer, who has been touted as an eventual successor to Merkel. “But such an emphatic result has surprised me too.”

Bordered by France and Luxembourg in Germany’s south-west, and with only about 800,000 people entitled to vote, the predominantly Catholic Saarland is the smallest German state (if the city states of Berlin, Bremen and Hamburg are excluded).

Kramp-Karrenbauer, 54, has been presiding over coalition governments in the state since 2009, initially in the “Jamaica coalition” with the Liberal party and the Greens, then in a “grand coalition” with the centre-left.

A defeat for “mini-Merkel”, Kramp-Karrenbauer and a historic change to a leftwing coalition government would have further boosted the Social Democrats’ hope of a triumph at the national level.

Instead, the leader of the Free Democrats (FDP), which in the Saarland once again fell short of the 5% threshold for entering parliament, said the SPD had been hurt by “fear of a red-red coalition”. The Christian Democrats, meanwhile, had “hoovered up” potential FDP voters, said Christian Lindner.

The result still means that only five out of Germany’s 16 states now have state premiers who are members of Merkel’s CDU or its Bavarian sister party, the Christian Social Union.

Two state elections in May will give further indications of the political temperature in Europe’s largest economy ahead of federal elections on 24 September. Both Schleswig-Holstein in the north and North Rhine-Westphalia in the west currently have centre-left state premiers.

The elections in North Rhine-Westphalia, Germany’s most populous state and a traditional Social Democrat stronghold, is seen as a key indicator of Schulz’s pulling power.

• This article was amended on 27 March 2017. An earlier version referred to a 40.4% majority where a 40.4% share of the vote was meant, and referred to Saarland as Germany’s least populous state; it is the second-least populous.