German third-quarter GDP remains flat as weak exports stall recovery

Germany's economy stagnated in the third quarter, the Federal Statistical Office reported on Tuesday, confirming that a long-expected rebound for Europe's largest economy has yet to take hold.

Detailed data released by the office, which is also known as Destatis, matched preliminary figures indicating that gross domestic product (GDP) remained flat for the July-September period, after slight growth in the first quarter and a decline in the second quarter.

Destatis said Germany may nevertheless escape a third consecutive year without growth, expecting economic output to pick up again slightly in the final quarter of 2025.

That matches expectations from Germany's central bank, which last week predicted a small rise in GDP as the year draws to a close. "Economic output could go back up slightly again in the fourth quarter," the Bundesbank said.

Analysts then expect improvement next year, helped partly by a boost to government expenditure on defence and transport infrastructure after restrictions on incurring new debt were eased.

Investment up, exports down

The Wiesbaden-based office said companies increased investment in machinery, equipment and vehicles in the third quarter, with equipment spending up 1.1% from the previous three-month period.

However, the export of goods and services fell 0.7%, as higher US tariffs and weak Chinese demand took their toll.

"The economy was slowed by weak exports in the third quarter, while investment increased slightly," Destatis President Ruth Brand said.

Price increases weighing on consumers

Rising prices for food and services also dented domestic consumer demand. Private consumption fell 0.3% in the third quarter, the first quarterly decline since the final quarter of 2023.

Surveys show that many people intend to cut back on spending even during the typically strong Christmas shopping period.

Labour market under pressure

The labour market is also suffering, with nearly 50,000 job losses within the last year in key sectors such as the automotive industry.

Destatis expects unemployment to rise again to more than 3 million in January and February due to seasonal factors.