German GDP Report: Trade, Industrial Sector Output, and Household Spending Dragged

Bob Mason

The German economy contracted by 0.1% quarter-on-quarter in Q3, in line with the preliminary report. However, year-over-year figures were weaker.

German GDP


  • According to finalized figures the German economy contracted by 0.1% in Q3.
  • Household spending, the industrial sector, and trade dragged on the economy.
  • German business sentiment figures and Christine Lagarde will also be in focus on Friday.

German Economy Contracts by 0.1% in Q3 2023

On Friday, the German economy was in the spotlight. Finalized German Q3 GDP numbers garnered investor interest.

The German economy contracted by 0.1% quarter-on-quarter in Q3 vs. 0.1% growth in Q2, in line with preliminary numbers. In Q3, the economy contracted 0.4% year-over-year, revised from a preliminary 0.3% contraction.

According to Destatis,

  • Household final consumption expenditure declined by 0.3% quarter-on-quarter.
  • Government final consumption expenditure increased by 0.2%.
  • Foreign trade was a drag on the economy. Exports of goods and services fell by 0.8%, with imports declining by 1.3%.
  • The industry sector (excl. construction) declined by 1.3%. There was a marked fall in the production of motor vehicles, trailers, and semi-trailers.
  • In contrast, the construction sector grew by 0.4%.

Year-Over-Year Overview

  • High prices weighed on household final consumption expenditure, which fell by 2.0%.
  • Government final consumption expenditure declined by 1.6%.
  • Foreign trade saw a marked decline, with exports of goods and services falling by 3.8%. Imports tumbled by 5.7%.
  • The industry sector (excl. construction) was down 3.8%.

Labor Market Conditions

  • Despite the economic contraction, employment increased year-over-year.
  • Total gross wages and salaries rose by 7.3% from a year earlier.
  • The savings ratio at 10.3% was higher than 9.6% one year earlier.
  • Notably, household disposable income increased by 4.7% vs. a 3.8% increase in household final consumption expenditure.

The EUR/USD Reaction to the German GDP Report

Before the GDP Report, the EUR/USD fell to a low of $1.08950 before rising to a high of $1.09119.

However, in response to the GDP Report, the EUR/USD rose to a high of $1.09073 before falling to a low of $1.09034.

This morning, the EUR/USD was up 0.02% to $1.09043.

EUR/USD Reaction to German GDP numbers.
241123 EURUSD 3 Minute Chart

German Business Sentiment and ECB President Lagarde

Later this morning, the German Ifo Business Climate Report and ECB President Lagarde will draw investor interest. A pickup in business confidence would signal an improving macroeconomic environment.

However, ECB President Lagarde also needs consideration.

US Private Sector PMIs in the Spotlight

On Friday, US private sector PMIs for November will draw investor interest. The Services PMI will likely have more impact, accounting for over 70% of the US economy. Investors must consider the subcomponents, including prices, employment, and new orders. The survey could impact market sentiment toward Fed interest rate goals.

About the Author

Bob Masonauthor

With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.

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