German economy grows 0.5%

The German economy grew by a solid 0.5% during the third quarter, largely thanks to higher consumer spending, official figures showed today.

Europe’s largest economy was 2.6% larger in the July to September quarter compared with a year earlier, Germany’s Federal Statistical Office said.

But new data measuring investor sentiment showed that businesses remain wary as Europe’s sprawling debt crisis weighs on growth prospects.

The ZEW investor sentiment index for November fell for the ninth month in a row to minus 55.2 points from minus 48.3 points in October. “A lower value of the indicator was last seen in October 2008” in the wake of investment bank Lehman Brothers’ collapse, the ZEW institute said.

“Government crises in Italy and Greece have further increased the uncertainty about the economic development in the eurozone,” said Wolfgang Franz, head of the ZEW institute.

Through the third quarter, however, growth was resilient and today’s official data were in line with market expectations.

“This shows that declining unemployment and increasing wage settlements are indeed supporting consumer spending to quite an extent, offsetting eurozone debt crisis fears,” economist Timo Klein of IHS Global Insight said.

The Federal Statistical Office said that the second quarter growth figures, adjusted for price and seasonal effect, were revised upward to 0.3% on the previous quarter.

Germany’s economic recovery since 2009 has been mostly driven by exports and improved domestic demand, even as many in the 17-nation eurozone struggle in the face of mammoth debts.