In line with the market consensus, the economy stagnated in the third quarter following an unrevised 0.2 percent gain in the previous period. This was the first time since the third quarter of 2022 that total output has not expanded. The flat quarterly performance also left annual growth steady at 0.6 percent.

Household spending declined a sizeable 0.4 percent on the quarter, reversing most of the second quarter's 0.5 percent gain and its first drop since the end of last year. Gross fixed capital formation was even weaker, slumping fully 2.0 percent, within which business investment was down some 4.2 percent, albeit after a cumulative increase of more than 8 percent in the previous two quarters. In a similar vein, government spending dropped 0.5 percent following a 2.5 percent jump. With business inventories (excluding alignment and balancing) subtracting 0.9 percentage points, total domestic demand declined 0.5 percent.

Consequently, growth would have been negative but for a reduction in the real trade deficit as exports rose 0.5 percent and imports fell 0.8 percent. This provided a 0.4 percentage point boost.

If they remain unrevised, the latest data will mean that the UK avoided falling into recession in the second half of the year. However, the economy is clearly struggling with domestic demand notably weak. In any event, the third quarter outcome was in line with the BoE's own forecast and should not have any immediate implications for policy. Indeed, financial markets will view today's update as increasing the likelihood that the next move in Bank Rate will be down. The UK's RPI now stands at 17 and the RPI-P at 12. Both readings show recent overall economic activity modestly outperforming market expectations.

Total quarter-over-quarter output is seen unchanged in the third quarter versus 0.2 percent growth in the second quarter that pushed up annual growth from 0.4 percent to 0.6 percent. The yearly rate for the third quarter is expected to hold at 0.6 percent.

Gross domestic product (GDP) is the broadest measure of aggregate economic activity and encompasses every sector of the economy. Since 2018, the first, or provisional, estimate includes the GDP expenditure components as well as data on the main output sectors. These results are updated in the second, and final, report.

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 a treasure-trove of information which not only paints an image of the overall economy, but tells investors about important trends within the big picture. These data are readily comparable to other industrialized countries. GDP components such as consumer spending, business and residential investment, and price (inflation) indexes 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. For example, if the UK reports that the consumer price index has risen more than the Bank of England's 2 percent inflation target, demand for sterling could decline. Similarly, when the Bank of England lowers interest rates, the pound sterling weakens. (Currency traders also watch the interest rate spread between countries.)