* GDP growth slows in Q3, construction treading water
* Private consumption rises for 3rd consecutive quarter
* Domestic demand contributes more than net trade
* PMI shows activity accelerated in November
* German economy may be headed for "golden decade" - analyst
(Adds fall in savings rate, GfK report)
By Brian Rohan
BERLIN, Nov 23 (Reuters) - Germany's growth rate slowed in the third quarter as a construction boom ran out of steam, but the outlook stayed upbeat as a more balanced recovery took hold and a survey showed business activity accelerated in November.
Quarterly gross domestic product growth in Europe's largest economy eased to 0.7 percent from 2.3 percent in the second quarter, seasonally adjusted figures from the Federal Statistics Office showed on Tuesday, confirming preliminary data.
But a detailed breakdown pointed to an increasingly balanced recovery, with export expansion easing and foreign trade playing a smaller role in an overall positive growth picture that stands in increasingly stark contrast to the economic gloom enveloping many other parts of the euro zone.
A separate report surveying purchasing managers suggested the economy is performing better than expected going into 2011, as growth in the services sector help to add jobs and reduce unemployment.
The GDP data showed that spending on the seasonally volatile construction sector contributed nothing to growth, having added 0.7 points in the second quarter. The new growth mix was welcomed by economists and ministers.
"Germany will remain the growth engine of the euro zone in 2011 -- we're expecting a self-sustaining upturn that will be increasingly supported by domestic demand," said Ulrike Kastens from Sal. Oppenheim.
Economy Minister Rainer Bruederle said the figures showed the economy was experiencing a "golden autumn", while the head of Germany's employers' association, Dieter Hundt, forecast 2010 growth would beat the government's forecast and post a 3.5 percent rise.
The overall slowdown was partly offset by steady growth in private consumption, which expanded for the third quarter in a row and lent the same contribution to growth as in the previous quarter.
Domestic demand added 0.4 percentage points to GDP in the July-September period -- making a larger contribution to growth than foreign trade, which lent only 0.3 percentage points after 0.5 percentage points in the previous quarter.
"The growth impulses came both domestically and from abroad," said Klaus Schruefer from SEB. "The economic recovery is broadening out increasingly."
Separate data from the statistics office suggested Germans were spending more -- in the third quarter they put aside only 9.6 percent of their income, as compared to 11 percent in the second quarter and 15.2 percent in the first.
'GOLDEN DECADE' BECKONS?
German investors have turned unexpectedly upbeat about the economy's prospects for the coming months, a key survey showed last week, fuelled by growing optimism about the domestic labour market and the U.S. outlook. The country suffered its biggest postwar recession in 2009 when its economy contracted 4.7 percent. Driven by exports and helped by stronger-than-usual consumer sentiment, it has emerged quickly from the slump and left most of its euro zone peers trailing.
Austerity measures to reduce public sector deficits are squeezing activity in a number of European states. But Germany's economy is proving more resilient than others so far to budget cutbacks, a subdued global trade environment and a strong euro.
It also looks well positioned to weather debt woes hitting weaker members of the euro currency bloc, leaving economists increasingly upbeat about its future prospects.
"Looking ahead, the German economy is not only heading towards the best growth year since reunification but is also at the beginning of what could become a golden decade," said Carsten Brzeski from ING Financial Markets.
"It's hard to find reasons for a sudden stop of the current momentum," he added. "Even the new sovereign debt woes and the Irish bailout should leave the German economy rather unharmed."
Official forecasts released last month show the government expects the economy to expand by 3.4 percent this year and by 1.8 percent in 2011.
Uplifted consumers may now be set to play an even greater role in the recovery -- consumer morale as measured by market researchers GfK rose more than expected going into December, data released later on Tuesday showed.
The rise put GfK's headline indicator at its highest level since October 2007, painting a rosy picture for the coming Christmas shopping season and possibly giving a sign consumers may up their demand for imports from other EU countries.
(Additional reporting by Dave Graham, Rene Wagner, Sarah Marsh, Erik Kirschbaum; Editing by Stephen Nisbet)