GERMAN exports rose 3.8 percent on the month in September, official data showed yesterday, a performance that beat economists' expectations and underlined an improving outlook for Europe's biggest economy.

Still, exports remained 18.8 percent below the levels of a year earlier, the Federal Statistical Office said. Imports rose 5.8 percent on the month, but were down 16.3 percent on the year.

Germany exported goods valued at 70 billion euros (US$105 billion) in September, while imports were worth 59.4 billion euros.

Germany's economy returned to modest growth in the second quarter following a deep recession. Preliminary third-quarter figures are due later this week and are expected to show further growth.

The month-on-month rise in exports, which traditionally have powered Germany's economy, beat economists' forecast of a 2.5 percent increase.

Andreas Rees, an economist at UniCredit in Munich, said it was the biggest monthly export upswing since the end of 2000, and that the coming months also look bright.

Indicators such as the Ifo institute's business confidence index point to a further acceleration in exports in the months ahead, he said.

As for the surge in imports, it "is primarily driven by imports of intermediate goods which will be processed further in Germany," he said.

Meanwhile, retail sales remain weak and imports of consumer goods sluggish, he added, revising downward his estimate of third-quarter economic growth to 0.8 percent from 1 percent.

The government and leading economists estimate the German economy will expand by 1.2 percent next year after likely shrinking by 5 percent in 2009.

Germany's exports to other countries in the European Union totaled 45.7 billion euros in September, while imports added up to 38 billion euros, the statistical office said.

Those figures marked a decline of 16.3 percent and 16.5 percent respectively on the year, it said.