German GDP slows down in the third quarter, as exports drag

German gross domestic product slowed down in the third quarter, with only an acceleration in household consumption and higher government spend helping to offset the drag from falling exports and flat investment.

GDP expanded at a 0.2% quarter-on-quarter clip over the three months ending in September, according to the Ministry of Economics.

That was in-line with the consensus forecast from economists.

Nonetheless, some observers expressed suprise at the weakness of capital investment, which was flat versus the previous quarter even after a 1.6% drop over the previous three months.

"Elsewhere, investment was the key downside surprise," said Claus Vistesen, Pantheon Macroeconomics´s chief Eurozone economist, adding that the outcome was "disappointing" in light of the second quarter fall.

Consumer spend increased 0.4% over the quarter, accelerating from the 0.2% recorded over the prior three months while government outlays clocked at a rise of 1.0%, slightly less than the upwardly revised 1.2% seen in the second quarter.

The increase in second quarter government spending was initially estimated at 0.6%.

"Germany is subject to intense critique at the moment for lack of fiscal stimulus, yet government consumption is surging at a rate not seen since the crisis in 2008 when governments scrambled to prevent the financial crisis from destroying their economies" the same economist added.

External demand subtracted 0.3 percentage points from the quarterly rate of GDP growth.

"Exports have thus finally been impacted to some extent by the increased level of global uncertainty (including the UK’s Brexit vote), while imports at the same time remain unusually subdued despite robust domestic demand that should also support purchases of intermediate goods from abroad for the production of investment goods," explained Timo Klein at IHS Markit.

IHS Markit´s forecast was for growth in Germany to reaccelerate to at least a 0.4% quarter-on-quarter pace in the final three months of 2016.

When compared with a year ago German GDP growth slowed from 1.8% in the second quarter to 1.7%.