(Adds fresh economist comment, GfK indicator detail)
By Paul Carrel
BERLIN, Nov 25 (Reuters) - Fading exports dragged Germany into its first recession in five years in the third quarter, more than offsetting a slight rise in private consumption, official figures showed on Tuesday.
Falls in inflation and unemployment have buoyed household spending in Europe's largest economy in recent months but economists say private consumption could soon ease as exporters start laying off workers due to weaker foreign demand.
"At the moment private consumption is a small support, but let's not be under any illusions," said UniCredit economist Andreas Rees.
"In the long run consumers will not be able to offset the declining exports and investment even with a sinking oil price, particularly as unemployment will rise again in 2009," he added.
The Federal Statistics Office said German gross domestic product (GDP) contracted by 0.5 percent quarter-on-quarter in the July-September period, in line with a preliminary estimate published earlier in November.
The third-quarter contraction was led by trade, which shaved 1.7 percentage points from the quarterly result, the Office said. Exports fell by 0.4 percent on the quarter, and imports rose by 3.8 percent.
Germany has been the world's largest exporter of goods since 2003, profiting from a period of strong global growth. But as boom turns to bust in many export markets, its large exposure to the global economy means it is suffering.
"We are facing a long recession -- at least until the middle of next year but with a risk that it lasts longer," Rees added.
GDP contracted by 0.4 percent in the second quarter, the Office said. A recession is widely defined as two or more consecutive quarters of negative economic growth.
The economy last shrank for two straight quarters in the first half of 2003. That contraction followed negative growth in the final quarter of 2002 -- making for the economy's weakest patch since German reunification in 1990.
SHOPPING STEADY
Tuesday's data showed third-quarter private consumption rose by 0.3 percent, adding 0.1 percentage points to the GDP result.
A survey by the GfK market research firm also showed consumer morale should improve in December. The GfK's forward-looking gauge of sentiment, based on a survey of 2,000 Germans, rose to 2.2 for December from 1.9 in November.
The more positive mood contrasted with reports from Italy and the Netherlands, where consumer morale fell this month.
Retail group Arcandor said last week the German Christmas shopping season had started without signs of a recession for the group.
"One can see in the GfK consumer sentiment data that when price increases are no longer a factor, consumer morale improves quickly," said DekaBank economist Sebastian Wanke. "But this won't last long. The threat now is rising unemployment."
Due to weaker global demand, Daimler, producer of Mercedes-Benz cars, and auto parts maker Bosch, have announced production cuts and extended time off for workers.
Chemicals giant BASF last week cut its 2008 profit outlook for the second time in two months and said it would cut back production, citing a "massive" decline in demand in key industries.
German corporate sentiment plunged to its lowest level in nearly 16 years in November, the Ifo institute's business climate survey showed on Monday.
Tuesday's GDP figures showed public sector consumption added 0.1 percentage points to growth in the third quarter. Gross capital investment made no contribution.
On an annual basis, GDP growth registered 1.3 percent. (Reporting by Paul Carrel and Noah Barkin; Editing by Ruth Pitchford)