Economic growth was unrevised in the second look at the January-March period. The quarterly change stays at a very modest 0.2 percent, a couple of ticks above the disappointingly poor fourth quarter rate. Positive base effects saw annual growth increase from 0.6 percent to a marginally higher revised 0.9 percent.

As shown in the provisional report, the modest quarterly gain masked a contraction in final domestic demand which subtracted a larger revised 0.2 percentage points from overall economic growth following a 0.3 percent hit in the previous period. Household spending was up only 0.1 percent having fallen 1.0 percent in the fourth quarter and gross fixed capital formation fell 0.8 percent. Within the latter, business investment decreased 0.4 percent and housing investment (minus 2.3 percent) declined for a third straight quarter. General government consumption was flat while business inventories reduced growth by a further 0.6 percentage points, double the original estimate.

Consequently, the economy would have contracted but for the external sector where net foreign trade added an upwardly revised 1.0 percentage point as exports fell 0.2 percent and imports 2.8 percent.

In sum, the economy continues to struggle in the face of high inflation, rising borrowing costs and strike activity linked to pension reform (unions have called for more industrial action on June 6th). Second quarter GDP is unlikely to impress. Indeed, with the French ECDI at minus 35 and the ECDI-P at minus 29, the signs are economic activity in general is falling quite well short of market expectations.

Quarterly growth is expected to be unrevised at a modest 0.2 percent.

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.