The economy was a little stronger than expected at the start of 2024. Following an unrevised 0.1 percent quarterly rise in the fourth quarter of 2023, GDP expanded 0.2 percent, a tick above the market consensus but still only in line with sluggish momentum. Annual workday growth was 1.1 percent, up from a marginally firmer revised 0.8 percent.

In fact, final domestic demand was rather more upbeat, increasing at a 0.4 percent quarterly rate with household spending also up 0.4 percent and gross fixed capital formation 0.3 percent. Within the latter, business investment advanced 0.5 percent but residential investment fell again, this time by 1.5 percent. General government consumption gained 0.6 percent but inventories subtracted a further 0.2 percentage points having already made a 0.9 percentage point dent previously.

Net foreign trade had no net impact as a 0.5 percent rise in exports was offset by a 0.2 percent increase in imports. This followed a 1.0 percentage point boost in the fourth quarter.

In sum, the provisional first quarter data look a little better than expected and with all the main components of domestic demand gaining ground, should pave the way for a potentially respectable second quarter. That said, growth is still lacklustre and lopsided, being largely dependent upon services. The French RPI now stands at 14 and the RPI-P at 17. Both readings show overall economic activity modestly outperforming market forecasts.

First-quarter GDP in France is expected to increase a quarterly 0.1 percent versus a 0.1 percent rise in the fourth quarter.

Gross domestic product (GDP) is the broadest measure of aggregate economic activity and encompasses every sector of the economy. The flash estimate, released a relatively short 4-5 weeks after the end of the reference quarter, is an effort to speed up delivery of key economic data. In contrast to most European flash releases, the French version provides an early look at the GDP expenditure components.

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.