German growth to rebound toward year-end

German growth will rebound after a poor third quarter as the economy works through one-off issues that held it back through the summer months, the Bundesbank said in a monthly economic report on Monday.

The GDP of the euro zone's biggest economy dropped by 0.2 percent last quarter with the fall due almost entirely to weakness in the car industry, which struggled to adjust to new emission testing requirements.

“By the end of the year, the German economy is likely to expand quite strongly again,” the Bundesbank said. “Overall economic production capacity will continue to be utilized far above average.”

It added that employment growth is solid and labor demand remains high, even as the economy is already struggling with labor shortages, which has pushed up wages.