European Central Bank. Picture: EPA/BORIS ROESSLER
European Central Bank. Picture: EPA/BORIS ROESSLER

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FRANKFURT — German economic growth was led by private and government consumption last quarter as trade dragged on output amid a global slowdown.

A breakdown of gross domestic product showed German private spending increased 0.6% in the three months through September, according to data released on Tuesday from the Federal Statistics Office in Wiesbaden.

Imports jumped 1.1% while exports rose just 0.2%, and capital investment shrank by 0.3%. The economy expanded 0.3%, matching a November 13 estimate.

Record-low unemployment and interest rates are supporting domestic demand in Europe’s largest economy, countering the effect of a China-led cooling in emerging markets that is curbing German sales overseas. More stimulus may be ahead as the European Central Bank (ECB) considers whether to ease euro-area monetary policy further.

"We do not expect Germany’s economic growth to swing out in one or the other direction from the current trend of steady but unspectacular," said Johannes Gareis, an economist at Natixis SA in Frankfurt.

"Thanks to a stabilisation of global growth, the lower euro and improving financing conditions on the back of a further easing of the ECB’s monetary-policy stance in December, we believe that Germany’s hard data will improve rather than deteriorate."

Domestic demand added 0.7 percentage point to growth last quarter, while net trade was a drag of 0.4 percentage point.

Economic activity in Germany picked up this month, with a gauge of services at the highest level since September 2014 and a measure of manufacturing also advancing, a survey byLondon-based Markit Economics showed on Monday. The ZEW index of investor confidence rose in November for the first time in eight months.

The chief headwinds are emanating from an emerging-market slowdown, sparked by China as it tries to reduce its dependence on investment and exports. The nationwas Germany’s third-largest trading partner last year.

Still, Switzerland’s Kuehne & Nagel International expects volume on Asia-European ocean routes, with China accounting for about two-thirds of the cargo, will rise by between 1% and 4% in 2016 after declining as much as 6% this year, Otto Schacht, the company’s sea-freight chief, said in a Bloomberg interview last week.

The Ifo institute is scheduled to release a gauge of Germany’s business climate at 10am in Munich. The index will probably remain unchanged at 108.2, according to a Bloomberg survey of economists.

Bloomberg