Germany's GDP rise was largely driven by higher household spending and increasing exports. /AP
Germany's gross domestic product (GDP) grew by 8.5 percent in the third quarter as Europe's largest economy showed signs of recovery from the plunge caused by the COVID-19 pandemic earlier in the year, according to its government statistics office.
The revised data beat earlier forecasts, which predicted the economy would grow by 8.2 percent over the quarter.
The rebound followed a 9.8 percent contraction in the second quarter and was mainly driven by higher household spending and increasing exports, the office said.
The jump could help Germany "offset a large part of the massive decline in the gross domestic product caused by the coronavirus pandemic," according to the office.
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Employment continues to decline
The data also reveal the impact of the pandemic on unemployment levels.
"The coronavirus crisis also has a considerable effect on the labor market. The economic performance in the third quarter of 2020 was achieved by roughly 44.7 million people in employment. This was a decrease of 654,000, or 1.4 percent, on a year earlier," the office said.
The GDP results coincide with the release of the latest German business confidence survey results from Munich-based research firm ifo.
"Sentiment among German managers has deteriorated. The ifo Business Climate Index fell from 92.5 points (seasonally adjusted) in October to 90.7 points in November. The drop was due above all to companies' considerably more pessimistic expectations," its report reads.
"Business uncertainty has risen. The second wave of coronavirus has interrupted Germany's economic recovery," it adds.
There were roughly 44.7m people in employment in Germany during Q3. /Reuters
Lockdown extensions
The economic update comes as Germany remains under partial lockdown following a major resurgence of COVID-19. The leaders of Germany's 16 states will meet Chancellor Angela Merkel on Wednesday to rubber-stamp proposals to extend the lockdown throughout December.
The draft lockdown plans suggest bars and restaurants will likely remain closed and domestic tourism discouraged using accommodation bans. Private gatherings will also likely be limited to just two households, with a maximum of five people.
There may, however, be some reprieve over Christmas, with the rules likely to be relaxed for families to gather in larger groups. However, for those who do gather in large groups, it's expected they will subsequently be requested to self-isolate by health authorities to help ensure the festive holiday doesn't become a super-spreader event.