The economy was rather stronger than expected at the start of the year but only after a sharper revised contraction at the end of 2023. Real GDP provisionally expanded at a 0.2 percent quarterly rate, a tick above the market consensus but after the previous period's fall had been steepened to fully 0.5 percent. Annual workday adjusted growth was minus 0.2 percent, matching the fourth quarter print while unadjusted, the rate dropped from minus 0.4 percent to minus 0.9 percent.

As usual, no GDP expenditure components were released in the first estimate but the Federal Statistical Office did indicate that the quarterly gain came courtesy of stronger construction and exports. Household spending declined.

While hardly robust, the first quarter data probably flatter to deceive since it looks as if final domestic demand was again weak. Business surveys have pointed to a better second quarter but with manufacturing still struggling and consumer sentiment depressed, growth is still unlikely to impress. That said, today's update puts the German RPI at 31 and the RPI-P at 44, both readings showing economic activity in general running well ahead of market expectations.

The flash estimate for first-quarter GDP is marginal quarter-over-quarter expansion of 0.1 percent and year-over-year contraction of 0.3 percent. These would compare with respective fourth-quarter contraction of 0.3 and 0.2 percent.

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.