The economy was surprisingly strong in the April-June period. Quarterly growth of 0.5 percent was well above the market consensus and the previous quarter's downwardly revised 0.1 percent. However, the increase was wholly attributable to net exports as both final domestic demand and business inventories had a negative effect. Annual growth was unchanged at 0.9 percent and total output was 1.7 percent above its pre-pandemic level at the end of 2019.

Household spending fell 0.4 percent on the quarter following a flat performance at the start of the year. Gross fixed capital formation edged 0.1 percent higher following a 0.4 percent drop but this masked a sharp 1.6 percent fall in household investment. With government consumption flat having decreased 0.2 percent in the first quarter, final domestic demand reduced growth by 0.1 percentage point. Business inventories trimmed the expansion rate by also 0.1 percentage point after a 0.3 percentage point hit previously.

Net foreign trade was very robust with a 2.6 percent quarterly spurt in exports easily more than offsetting a 0.4 percent gain in imports. As a result, the real trade balance added fully 0.7 percentage points.

In sum, the domestic economy continues to struggle in the face of high inflation and rising borrowing costs and would have shrunk last quarter but for the buoyancy of overseas demand. Looking ahead, recent business surveys have been generally poor and consumer confidence remains unambiguously low. Third quarter GDP growth is likely to be a good deal weaker. Even so, for now, with the French ECDI at 18 and the ECDI-P at 21, overall economic activity is performing rather better than markets expected.

Second quarter GDP in France is expected to edge 0.1 percent higher on the quarter versus 0.2 percent growth in the first quarter.

Gross domestic product (GDP) is the broadest measure of aggregate economic activity and encompasses every sector of the economy. The flash estimate, released a relatively short 4-5 weeks after the end of the reference quarter, is an effort to speed up delivery of key economic data. In contrast to most European flash releases, the French version provides an early look at 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. 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.