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(Bloomberg) -- Chancellor Olaf Scholz’s Social Democrats won a regional election in the port city of Hamburg, a week after a crushing defeat on the national level.

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The SPD took 33.5% of the vote, ahead of the Christian Democratic Union of chancellor-in-waiting Friedrich Merz at 19.8% and the Greens at 18.5%, according to preliminary official results. While Merz’s Christian Democratic Union posted the biggest gain on Sunday, the result allows Hamburg’s governing coalition of SPD and Greens to retain power with a slimmed majority in the city legislature.

Dennis Thering, the CDU’s mayoral candidate, said the Social Democrats should consider switching partners as they contemplate a potential role in a Merz-led coalition at the national level.

“We’re seeing that we’re getting a grand coalition at the federal level,” Thering said on ARD television. “That would also work well in Hamburg.”

Scholz’s center-left SPD has ruled Hamburg for most of the 80 years since World War II, including under Scholz between 2011 and 2018. Its victory might support the SPD’s planned leadership change on federal level in Berlin and could strengthen its hand in upcoming coalition talks with Merz’s conservative bloc.

Hamburg is economically important as Germany’s largest port — the third-biggest in Europe — and a home of industry including an Airbus SE factory.

The far-right Alternative for Germany — the second-biggest party nationwide after the Feb. 23 federal election — took 7.5% in Hamburg and the Left party won 11.2%.

Merz wants to form a government led by his conservative bloc by mid-April. Unlike in the US or UK, parties in Europe’s biggest economy usually need to team up with another party to form a coalition that has a parliamentary majority. Those talks can drag on until party negotiators agree on a joint policy platform.

Key officials from the conservative CDU/CSU bloc and the SPD met for a first round of exploratory talks in Berlin on Friday and are expected to continue conversations this week.

The Hamburg SPD benefits from a strong personal approval rating for Mayor Peter Tschentscher, 59, who has been in power since 2018. Tschentscher succeeded Scholz as mayor.

The city — one of Germany’s 16 federal states represented in the upper house of parliament, or Bundesrat, in Berlin — has about 1.3 million eligible voters.