Company spending is aiding the economy

Economic output grew by 0.7% between July and the end of September from 0.3% and 0.5% in the previous two quarters, the Federal Statistics Office reported.

Domestic consumption improved, supported by higher employment levels.

But economists said growth would slow in the fourth quarter due to the impact of high oil prices and the strong euro.

They also warned that this trend would continue in the early part of next year.

High point?

The expected slowdown in the US economy next year has led most forecasters to predict that Europe's leading economies will go the same way.

The European Commission recently reduced its forecast for 2008 growth in the eurozone - of which Germany is the biggest member - to 2.2%.

In the coming months, there will be a noticeable slowdown Andreas Rees, Unicredit

But the latest preliminary gross domestic product (GDP) figures suggest Germany is on track for annual growth of about 2.5%, which would be one of the best performances in the past 15 years.

Overall output is currently 2.4% higher than last year, driven by employment levels which are up 1.5% on a year ago.

The Federal Statistics Office said there had been a "moderate" increase in household consumption during the period but that the trade balance had not altered markedly.

Analysts said the figures were in line with their expectations and were more concerned wih the anticipated slowdown ahead.

"Unfortunately this is just a look in the rear-view mirror," said Andreas Rees, an economist with Unicredit.

"In the coming months, there will be a noticeable slowdown. The fourth quarter will already be weaker and things should go down further in the first quarter of 2008."