The economy again disappointed last quarter. GDP was provisionally only unchanged from its level in the previous period when it contracted a shallower revised 0.1 percent. The outturn fell just short of the market consensus and left annual workday adjusted growth flat at minus 0.2 percent. Unadjusted, total output was down 0.6 percent on the year after a 0.1 percent decline last time.

As usual, no GDP expenditure components were released in the first estimate but the FSO did indicate that household consumption stabilised after a sizeable fall at the start of the year.

Today's update means that the German economy has still not expanded since the third quarter of last year. However, taken together with the data already released from France (0.5 percent) and Spain (0.4 percent), the signs are that the Eurozone as a whole returned to positive growth last quarter. That said, domestic demand remains soft. For Germany, the latest report puts the ECDI at minus 19 and the ECDI-P at minus 31. In other words, economic activity in general is still failing to keep with market expectations.

The economy is expected to have expanded just 0.1 percent on the quarter following a 0.3 percent contraction at the start of the year.

Gross domestic product (GDP) is the broadest measure of aggregate economic activity and encompasses every sector of the economy. The provisional or flash estimate is normally released in the second week of the second month after the reference quarter. This is based on only limited data and provides just quarterly and annual growth rates and a limited qualitative guide to how the major output sectors performed.

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 anaemic 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.