Germany Q2 GDP Revised Up to 0.3%, Exports Lead the Recovery

Germany’s economy grew 0.3% quarter-on-quarter in the second quarter of 2026, a modest upward revision from the 0.2% flash estimate. Destatis, the federal statistics office, said annual GDP came in at 1.0%, with exports once again providing the main lift.

Exports of goods and services rose 2.0% from the previous quarter, led by a 2.6% jump in goods exports. Imports increased 1.5%. Destatis attributed the revision to stronger-than-expected wholesale and retail trade data and fresh trade figures showing a robust June for exporters.

Year-on-year, exports climbed 3.7%, driven by demand for chemical products, electronics, optical goods, and transport equipment. Trade with EU partners strengthened, while imports were lifted by higher purchases from the U.S., China, and the EU.

Domestic investment remained patchy. Gross fixed capital formation fell 0.2% from Q1, with machinery and equipment investment down 1.4%. Construction investment edged up just 0.1%, underscoring that the sector is still struggling to recover from weather-related disruptions earlier in the year.

Consumption was similarly subdued. Household and government spending each rose only 0.1% quarter-on-quarter, a sign that domestic demand is playing a limited role in the recovery.

Manufacturing output rose 0.9%, with chemical producers and electrical equipment makers posting particularly solid gains. Most service sectors also expanded: information and communication, real estate, and public services each grew 0.6%. The exception was financial and insurance activities, where value added fell 0.7%.

On a yearly basis, manufacturing expanded 1.1% – the sector’s first annual increase since early 2023.

The labour market continued to show strain. Employment fell 0.5% compared with Q2 2025, leaving total employment at roughly 45.7 million. Jobs declined across manufacturing, construction, and – for the first time since the pandemic – services.

Productivity improved. GDP per hour worked rose 1.5% year-on-year, reflecting stronger output from a smaller workforce. Household finances also brightened: gross wages and salaries per employee rose 4.4% year-on-year, while total net wages and salaries gained 4.7%.

Germany’s quarterly growth of 0.3% lagged the broader European Union, which expanded 0.5%. Among the largest EU economies, Spain led with 0.7%, while France and Italy each grew 0.2%. On an annual basis, Germany’s 1.0% also trailed the EU average of 1.2%.