The economy was slightly stronger than expected at the start of the year. A 0.3 percent quarterly increase in real GDP was a couple of ticks above the market consensus and, following an unrevised flat reading in the fourth quarter of 2022, trimmed annual growth from 0.7 percent to 0.6 percent. Adjusted for sporting events, total output was up 0.5 percent versus the previous period when it was also unchanged.

The quarterly acceleration was attributable to domestic demand which expanded 0.9 percent as consumer spending rose 0.6 percent, mainly on services, and investment in equipment and software climbed a solid 2.6 percent. However, government consumption was just flat and construction dipped 0.1 percent. Consequently, GDP would have been weaker but for business inventories which added 0.7 percentage points.

Net foreign trade had a small negative impact. Exports of goods were up fully 4.0 percent but services declined 5.5 percent, while their import counterparts increased 5.4 percent and 1.4 percent respectively.

In terms of output, growth was led by trade (2.1 percent), accommodation and food (1.0 percent) and construction (0.8 percent). Manufacturing output rose 0.3 percent, its first gain in four quarters.

Today's update suggests that the economy held up rather better than expected last quarter. Spending on services continued to benefit from pent-up demand caused by earlier Covid restrictions and this was more than enough to offset a weak period for retail sales. Still, business inventories may weigh on output this quarter and leading indicators have been notably weaker in recent months. To this end, today's update puts the Swiss ECDI at minus 24 and the ECDI-P at minus 18, both measures showing overall economic activity underperforming market forecasts.

First-quarter GDP is expected to edge up 0.1 percent on the quarter versus no growth in the prior quarter.

Gross domestic product (GDP) is the broadest measure of aggregate economic activity and encompasses every sector of the economy. There is no flash estimate and the first report is typically not issued until around sixty days after the end of the reference quarter. This has the advantage of limiting the size of any future revision and also accommodates the inclusion of the GDP expenditure components.

GDP is the all-inclusive measure of economic activity. Investors need to closely track the economy because it usually dictates how investments will perform. Investors in the stock market like to see healthy economic growth because robust business activity translates to higher corporate profits. Bond investors are more highly sensitive to inflation and robust economic activity could potentially pave the road to inflation. By tracking economic data such as GDP, investors will know what the economic backdrop is for these markets and their portfolios.

The GDP report contains a treasure-trove of information which not only paints an image of the overall economy, but tells investors about important trends within the big picture. GDP components such as consumer spending, business and residential investment, and price (inflation) indexes illuminate the economy's undercurrents, which can translate to investment opportunities and guidance in managing a portfolio.