The German economy grew slightly more in the third quarter than preliminary figures suggested, bolstered by consumer spending, data showed today.

Europe's largest economy grew by 0.4% quarter on quarter and 1.3% on the year, adjusted for price and calendar effects, the federal statistics office said.

Analysts polled by Reuters had expected the economy to grow by 0.3% in the third quarter on quarter and 1.2% on the year.

Household spending was the main reason for the bump in the quarter-on-quarter figure as consumers travelled and went out more after nearly all pandemic restrictions had been lifted.

In the previous quarter, the German economy grew slightly, by 0.1% quarter on quarter.

In its latest forecast, the government predicted the economy would grow by 1.4% this year and slump by 0.4% next year.

An economy ministry spokesperson said current indicators continue to point to a recession in the six months through March.

"The preconditions for a mild course of the recession are that no acute gas shortage situation arises, that no difficult Covid developments occur and that the supply chains continue to stabilise gradually," added the spokesperson.

Meanwhile, German consumer sentiment is set to barely change in December as government energy measures help stabilise morale at a level that is just above a record low set two months earlier and still signals declining consumption, a GfK institute survey showed today.

The institute said its consumer sentiment index rose to negative 40.2 heading into December from a reading of negative 41.9 in November, and below forecasts from analysts polled by Reuters of negative 39.6.

October marked the lowest reading in over a decade at negative 42.8.

A negative reading suggest a year-on-year drop in private consumption.

"The long-lasting fear of consumers regarding exploding energy prices has currently weakened somewhat, which has a slightly positive effect on the consumer climate," said GfK consumer expert Rolf Buerkl.

While a one-off gas relief payment for households in December and a cap on gas and electricity prices next year helped improve the mood, the situation remains tense and there will not be any significant, sustainable recovery in morale as long as energy supply doubts remain, added Buerkl.

The subindex measuring willingness to buy was the only one to fall in November, dropping to -18.6 from -17.5 in October, as consumers are still putting aside money in anticipation of exploding energy bills in the coming months, said the GfK.

Prices portal Verivox said last week that many German households face another more than 50% hike in power and gas costs in January due to the lag in suppliers passing on higher wholesale market prices and rising grid fees.

The consumer climate indicator forecasts the development of real private consumption in the following month.

An indicator reading above zero signals year-on-year growth in private consumption. A value below zero indicates a drop compared with the same period a year earlier.

According to GfK, a one-point change in the indicator corresponds to a year-on-year change of 0.1% in private consumption.

The "willingness to buy" indicator represents the balance between positive and negative responses to the question: "Do you think now is a good time to buy major items?"

The income expectations sub-index reflects expectations about the development of household finances in the coming 12 months.

The additional business cycle expectations index reflects the assessment of those questioned of the general economic situation in the next 12 months.