Germany's economy grew in line with expectations in the third quarter, but remained sluggish compared to the growth in the previous quarter, according to a report from Destatis, the Federal Statistical Office of Germany.

Germany reported economic growth of 0.7 percent in the third quarter, while second quarter GDP was revised to 2.3 percent, which is the fastest growth rate seen in Germany so far.

Consumer spending, an important contributor to GDP, was up 0.4 percent in the third quarter, for the third consecutive period. However, government final consumption expenditure also rose 1.1 percent. Capital formation in machinery and equipment rose 3.7 percent sequentially, the report stated.

Exports continued to rise by 2.3 percent, and remained above the 1.9 percent rise in imports. However, it was below the expected growth of 3.4 percent.

The export surplus contributed 0.3 percentage points to GDP growth, the report said.

Separately, the Germany manufacturing purchasing manager index (PMI) in November showed the sharpest expansion since July at 58.9, up from 56.6 in October, according to a report by Markit Economics.

Economists were expecting an expansion of 56.8.

Both manufacturing and services recorded much faster rises in business activity than those registered in October, the report stated.

The rate of growth in the service sector accelerated to its fastest since August 2007, the report added.

The rise in output growth also spurred job creation in the German private sector at the fastest pace since September 2007. Job growth in the manufacturing sector, which is one of the hardest hit during the recession, was the most marked since the survey began in April 1996, the report stated.

Germany's unadjusted unemployment rate fell to 7.0 percent in October, its lowest level in 18 years. The headline reading of the number of jobless people fell below the 3 million mark for the first time since Nov. 2008. On an adjusted basis, the jobless rate held steady at 7.5 percent in October.

New export orders in the manufacturing sector also rose during November, but the pace of expansion remained much slower than average for the first half of 2010.

The PMI is a good indicator of trends in the manufacturing sector, as well as the overall economic condition in the country.