German GDP growth for Q3 2017 printed at 0.8% Q/Q, easily beating the consensus estimate of 0.6%, which was in line with growth in the previous quarter, driven by fixed capital formation amid stable household and government consumption. While year-on-year GDP growth was reported as 2.3%, the underlying growth was 2.8% after adjusting for calendar effects. The data confirmed that German growth was on track for its best year since 2011, and pushed the EUR higher for the fifth day, rising above 1.1700 for the first time in 3 weeks.

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The German economy powered ahead in the third quarter, underpinning a recovery in the euro area…. Output increased 2.8 percent from a year earlier when adjusted for working days. The report confirms the Bundesbank’s prediction that the German economy carried its strong growth momentum into the second half, putting it on course for its best performance since 2011 and potentially straining up against its maximum capacity…“

You can feel the German economy is really humming along,” Holger Sandte, chief European analyst at Nordea Markets in Copenhagen, said before the release. “We are looking at a pretty robust picture so that raises the question: where is the speed limit?”

Germany’s Federal statistics office noted that the stronger-than-expected growth was driven by exports and capital investment. Spending on equipment was reported to be particularly strong. With hindsight, this shouldn’t be that much of a surprise as both “hard” and “soft” indicators – especially in the manufacturing sector – have shown accelerating momentum in 2017. The September manufacturing PMI reading for September 2017 of 60.6 was a 77-month high and printed at the same level in October 2017, implying that the momentum has carried forward into the last quarter of the year. However, if there was one small negative in today’s German data, it was the ZEW Indicator of Economic Sentiment: for November 2017, the expectations indicator rose 1.1 points from 17.6 the previous month to 18.7, below the 19.5 consensus.