BERLIN: German gross domestic product growth accelerated to 0.5 percent in the third quarter from an upwardly revised 0.3 percent in the second, as private consumption grew at its strongest pace in more than a year, data showed on Thursday.
The seasonally adjusted figures, which confirmed an earlier flash estimate, showed private consumption swung back to growth of 0.8 percent after contracting 0.6 percent in the previous quarter, and investment in plant equipment rose 2.9 percent.
State spending also rose 0.6 percent, and exports gained 2.5 percent. On an annual basis however the figures marked another easing of growth, to 2.5 percent from 3.0 percent in the previous quarter.
"Positive momentum came first and foremost from the domestic economy. More was consumed and more was invested than in the previous quarter," the statistics office said in a statement.
Analysts, however, noted the data looked likely to be the last upbeat news on the economy in some time. Investor morale has since soured, fuelling expectations of a sharp slowdown in coming months as the euro zone debt crisis weighs more heavily.
Germany's key IFO sentiment index which will be released at 0900 GMT is expected to have fallen for a fifth consecutive month to 105.1 points.
"With the latest drop in confidence indicators and fiscal problems in France and Italy, two important German trading partners, concerns about the strength of the German economy have increased," said Carsten Brzeski at ING in a note.
Germany, Europe's key growth engine now faces a struggle to fend off a recession that threatens the euro zone as a whole.
That Germany is not immune to the negative sentiment sweeping across the continent was shown by a botched sale of German bonds on Wednesday, where Berlin sold to commercial banks just 3.64 billion euros worth of the 6 billion euros of bonds on offer.
TROUBLE AHEAD
Germany recovered swiftly from the 2008/09 financial crisis, with its growth outstripping all others in the single currency zone, but there are clear signs the economy is now down-shifting.
German industrial orders saw their steepest decline in September since early 2009, weighed down by sharply weaker demand from the euro zone. Industrial production has already begun to feel the pinch -- with output falling 2.7 percent in September.
Economists, the government and the Bundesbank have all cut their German growth forecasts in recent weeks. The government now forecasts growth of 1 percent in 2012, down from an earlier estimate of 1.8 percent.
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