German GDP grows 0.2% in third quarter, slowing from previous quarter
Key Facts
The German economy recorded preliminary quarter-on-quarter growth of 0.2% in the third quarter of 2026, compared with analysts’ expectations of 0.1%, according to a report published by InvestingLive on October 30. The quarterly reading is consistent with the figure in the Federal Statistical Office’s GDP table, which shows seasonally and calendar-adjusted growth of 0.2%. But the same table records a 1.3% year-on-year increase in GDP, adjusted for prices, in the third quarter. The office had reported that GDP rose 0.3% in the second quarter compared with the first, after revising first-quarter growth to 0.4%. This means the quarterly increase in the third quarter was slower than the previous quarter’s pace, despite exceeding the estimate cited in the report.
The reading comes as the Bundesbank had expected, before the third-quarter result was released, real seasonally adjusted GDP growth to stall after the clear increase in the first half of the year. The bank said the recovery had suffered a temporary interruption, pointing to low water levels on the Rhine and restrictions on river transport as factors weighing on industrial activity. It also said support from exports was fading and the effects of temporary stockpiling had ended, alongside rising energy prices. In its view, private consumption was unlikely to support growth during the quarter. Before the data were released, the Economy Ministry had said growth momentum may have slowed temporarily, while higher energy prices, uncertainty and financing costs were curbing domestic demand.
In industry, the Bundesbank identified the automotive sector as the main factor behind the continued weakness in industrial production in August. Construction, by contrast, supported activity, with the bank saying sector output rose again in the same month. The contrasting performance of the two sectors shows how the economy could post a limited quarterly increase despite continued pressure on industry. The labor market also remained relatively stable in September; seasonally adjusted registered unemployment stood at around 3 million, equivalent to an unemployment rate of 6.4%. The Federal Employment Agency said the rate fell 0.1 percentage points from the previous month; these figures relate to September and are not a new reading for October.
Weak activity momentum coincided with accelerating inflation. The harmonized consumer price inflation rate was 3.3% year on year in September, compared with 2.9% in August, according to the Bundesbank. The bank attributed the increase in inflation to energy prices linked to the conflict in the Middle East. In its October report, it said the course of the recovery ahead depends, among other factors, on developments in the war in the region. This adds pressure to the economy at a time when the bank also said high energy prices are limiting activity by households and businesses. This mix did not prevent the bank from expecting German production to improve again markedly in the fourth quarter.
Attention now turns to German retail sales data for September, due to be published on November 2; the Trading Economics calendar showed an expectation of a 0.3% year-on-year decline. On the same day, Bundesbank President Joachim Nagel will take part in a discussion on monetary policy before the Bundestag’s Committee on European Affairs at 13:00 Berlin time. The bank’s calendar does not describe the event as a speech; it lists a speech titled “Courage for More Europe” on November 3. The bank’s outlook for activity is based on the possibility that output will improve in the fourth quarter as temporary pressures fade, saying catch-up effects may emerge when those factors recede. Developments in the conflict in the Middle East remain one of the factors the bank said would affect the course of the recovery.