The economy contracted in the third quarter. The second look at GDP showed a 0.1 percent quarterly decline, matching the earlier estimate and reversing the previous period's minimal increase. Total output has been essentially flat since the fourth quarter of 2022. Annual workday adjusted growth was revised a tick lower to minus 0.4 percent while unadjusted, GDP was down 0.8 percent on the year.

Household consumption dropped a quarterly 0.3 percent, its third decline in the last four quarters, but gross fixed capital formation rose 0.6 percent courtesy of gains in equipment investment (1.1 percent) and construction spending (0.4 percent). Government consumption was up 0.2 percent but business inventories subtracted 0.4 percentage points. Consequently, domestic demand also declined 0.4 percent.

Net foreign trade had a positive effect (0.2 percentage points) but only because imports (minus 1.3 percent) fell faster than exports (minus 0.8 percent).

The detailed national accounts leave the German economy in a fragile position heading towards year-end. The weakness of consumer spending is a major issue and with confidence levels here still historically very low, the sector looks likely to be a drag on growth again this quarter. Indeed, while the pick-up in investment is good news, recession is probably just around the corner. Still, today's update puts the German RPI at 8 and the RPI-P at 11, both readings showing overall economic activity at least running marginally ahead of market expectations.

No revisions are expected, leaving a 0.1 percent quarterly contraction and a workday adjusted annual decline of 0.3 percent.

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.