Fri Jun 23 01:45:00 CDT 2017

Consensus Actual Previous
Quarter over Quarter 0.4% 0.5% 0.4%
Year over Year 1.0% 1.1% 1.0%

The final look at first quarter GDP showed a slightly better all-round performance. The quarterly increase in total output was revised up from 0.4 percent to 0.5 percent and so now matches the rate posted at the end of 2016 while annual growth was also nudged 0.1 percentage points higher to 1.1 percent.

However, the positive headline change masked a weaker revised flat period for household consumption. The other major components of domestic final demand were unchanged from their respective previous estimates with gross fixed capital formation up a solid 1.2 percent and government consumption 0.3 percent firmer. Inventory accumulation similarly still added some 0.7 percentage points to quarterly growth.

Rather, the modest headline amendment reflected a slightly less negative contribution from foreign trade. Exports were down a marginally smaller 0.7 percent which, with the rise in imports trimmed to 1.2 percent, reduced the hit from net exports from 0.7 percent to 0.6 percent.

Today's revision to French economic growth is too historic to be of any real significance to financial markets. However, domestic demand will need to show a much better balance if the current upswing is to be both robust and durable.

Gross domestic product (GDP) is the broadest measure of aggregate economic activity and encompasses every sector of the economy. Following the release of the flash estimate about four weeks earlier, the second report incorporates additional data to provide a more accurate reading. This is also revised in the final report, published in the third month after the reference quarter.

GDP is the all-inclusive measure of economic activity. Investors need to closely track the economy because it usually dictates how investments will perform. Stock market Investors like to see healthy economic growth because robust business activity translates to higher corporate profits. The GDP report contains information which not only paints an image of the overall economy, but tells investors about important trends within the big picture. These data, which follow the international classification system (SNA93), are readily comparable to other industrialized countries. GDP components such as consumer spending, business and residential investment illuminate the economy's undercurrents, which can translate to investment opportunities and guidance in managing a portfolio.

Each financial market reacts differently to GDP data because of their focus. For example, equity market participants cheer healthy economic growth because it improves the corporate profit outlook while weak growth generally means anemic earnings. Equities generally drop on disappointing growth and climb on good growth prospects.

Bond or fixed income markets are contrarians. They prefer weak growth so that there is less of a chance of higher central bank interest rates and inflation. When GDP growth is poor or negative it indicates anemic or negative economic activity. Bond prices will rise and interest rates will fall. When growth is positive and good, interest rates will be higher and bond prices lower. Currency traders prefer healthy growth and higher interest rates. Both lead to increased demand for a local currency. However, inflationary pressures put pressure on a currency regardless of growth.