The economy contracted in the third quarter but by slightly less than expected. A provisional 0.1 percent dip in real GDP versus a marginally stronger revised April-June period was a tick less than the market consensus but still means that total output has not expanded since the third quarter of 2022. Technically the economy is not yet in recession but probably already feels like it is, and back-to-back falls in GDP will likely be confirmed by the end of this year. Annual workday adjusted growth dropped from 0.0 percent to minus 0.3 percent while unadjusted, GDP was down 0.8 percent versus the same period last year.

As usual, no GDP expenditure components were released in the first estimate but the FSO did indicate that household consumption declined while investment in machinery and equipment made a positive contribution.

While less weak than anticipated, the fall in German output last quarter underlines the tricky task facing the ECB as it tries to bring inflation under control without inflicting unnecessary damage on the Eurozone economy. For Germany, the latest report puts the RPI at 5 and the RPI-P at 17, both readings showing economic activity in general running just ahead of market expectations.

The flash estimate for third-quarter GDP is quarter-over-quarter contraction of 0.2 percent. German GDP has not expanded since the third quarter of last 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.