Economic growth was unrevised in the final data for the second quarter. Real GDP was flat at its level in the previous period when it contracted 0.1 percent. With the fourth quarter of 2022 showing a 0.4 percent decline, total output has not expanded since the third quarter of last year. Annual workday adjusted growth was similarly unrevised at minus 0.2 percent while the unadjusted yearly change remains at minus 0.6 percent.

However, the national account details reveal a somewhat stronger underlying picture with domestic demand rising a quarterly 0.6 percent. That said, much of this was attributable to inventory accumulation which alone added 0.4 percentage points. Still, investment in machinery and equipment rose 0.6 percent and construction was up 0.2 percent. Consumer spending was only flat having fallen in the previous two quarters but government consumption edged 0.1 percent firmer.

Consequently, headline growth would have been more robust but for net foreign trade which subtracted a sizeable 0.6 percentage points after adding 0.9 percentage points in the first quarter. Exports fell 1.1 percent while imports were unchanged.

Today's update paints a slightly less gloomy picture of the German economy last quarter but more recent data warn that total output will again struggle to keep its head above water in the current period. In particular, household budgets continue to be undermined by rapidly rising consumer prices and ECB tightening is now having a more marked impact in general. The German ECDI now stands at minus 20 and the ECDI-P at minus 18. In other words, overall economic weakness is rather more entrenched than markets expected.

No revisions are expected to the provisional data leaving a flat quarterly change and a 0.2 percent yearly contraction.

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 two weeks earlier, the second report incorporates additional data to provide a more accurate reading. It also contains details of the key GDP expenditure components and full national accounts.

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.