German Economy Avoids Recession In Q3

(RTTNews) - The German economy avoided a technical recession in the third quarter, thanks to household and government consumption, preliminary estimate from Destatis showed Wednesday.

Gross domestic product grew 0.2 percent from a quarter ago, confounding expectations for a contraction of 0.1 percent. However, the statistical office downwardly revised the fall for the second quarter to 0.3 percent from 0.1 percent.

With the latest growth, the largest euro area economy avoided a technical recession. On a yearly basis, calendar-adjusted GDP logged an expansion of 0.2 percent, reversing the second quarter's 0.3 percent decline and confounded expectations for a drop of 0.3 percent.

Meanwhile, the price-adjusted GDP grew 0.2 percent on year, following a 0.1 percent rise in the prior quarter. Detailed results will be released on November 22.

Data published by the Federal Employment Agency today showed that the unemployment rate remained unchanged at 6.1 percent in October, in line with expectations.

The number of people out of work increased 27,000 from the previous month after rising 19,000 in September. This was bigger than forecast of 17,000.

Federal Employment Agency chairwoman Andrea Nahles said the autumn recovery in the labor market was absent this year. Although unemployment and underemployoment declined in October, decreases were very small, Nahles noted.

Today's GDP data does not take away the fact that the economy remains stuck in stagnation, ING economist Carsten Brzeski said. "At least it is not falling into a severe recession," he added.

The government forecast the largest euro area economy to contract 0.2 percent this year. Last week, the International Monetary Fund projected the economy to stagnate this year and expand 0.8 percent in 2025.

Elsewhere, France and Spain showed better-than-expected growth, while Italy stagnated in the third quarter.

As the Paris Olympic and Paralympic Games boosted consumption, the French GDP growth doubled to 0.4 percent from 0.2 percent in the second quarter. This was also better than economists' forecast of 0.3 percent.

Underpinned by domestic demand, Spain's GDP grew 0.8 percent on a sequential basis, the same rate as seen in the second quarter. Growth was forecast to ease to 0.6 percent.

Italy's GDP remained flat in the third quarter, following a 0.2 percent rise in the second quarter. Economists had forecast the economy to log another 0.2 percent expansion.