Weak trade put brakes on German growth in third quarter
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An employee works at a production line for circuit breakers at a ABB factory in Heidelberg, Germany, July 7, 2016. REUTERS/Ralph Orlowski
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BERLIN (Reuters) - The German economy halved its growth rate to 0.2 percent in the third quarter despite rising private consumption and higher state spending as weak foreign trade slowed overall activity in Europe's biggest economy.
Confirming a preliminary reading for growth, the Federal Statistics Office said on Thursday that net foreign trade subtracted 0.3 percentage points from GDP growth as exports fell by 0.4 percent on the quarter and imports rose by 0.2 percent.
State spending increased by 1.0 percent on the quarter, contributing 0.2 percentage points to growth. Authorities are spending billions of euros on accommodating and integrating more than one million migrants who have arrived since the start of 2015, many from war zones such as Syria and Iraq.
Household spending rose by 0.4 percent on the quarter, also adding 0.2 percentage points to GDP in the three months through September as consumers benefited from record-high employment, rising real wages and low borrowing costs.
Investment in construction edged up 0.3 percent in the third quarter as Germany's growing population, increased job security and record-low interest rates fuel a property boom. But construction did not contribute to growth.
In a sign that companies are holding off investment despite the European Central Bank's policy of cheap money, investment in plant and equipment fell by 0.6 percent on the quarter.
(Reporting by Michael Nienaber; Editing by Michelle Martin)
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