The recession ended at the start of the year as the economy expanded at a surprisingly robust 0.6 percent quarterly rate. This was well above the market consensus and the first positive print since the start of 2023. After an unrevised 0.3 percent contraction in the previous period, the first quarter advance lifted annual growth from minus 0.2 percent to 0.2 percent.

The quarterly increase partly reflected gains in household spending (0.2 percent) and gross fixed capital formation (1.4 percent). Within the latter, business investment was up 0.9 percent, building on the previous period's 1.4 percent rise. Government consumption (0.3 percent) also made fresh ground while business inventories (excluding alignment and balancing) had no significant impact.

Headline growth also benefitted from an improvement in net foreign trade although this masked a contraction in both sides of the balance sheet. Export volumes fell 1.0 percent which, with their import counterpart down a sharper 2.3 percent, made for a net boost of 0.4 percentage points.

Confirmation that the economy is growing again will come as no surprise to the BoE but the speed of the recovery will - just yesterday the bank estimated a 0.4 percent rise in total output. Consequently, today's data may well leave some MPC members all the more cautious about cutting Bank Rate too soon especially with services output increasing in every month of the quarter. Indeed, today's updates raise the UK RPI to a solid 41 and the RPI-P to an even higher 52. Economic activity is clearly now exceeding expectations by some margin.

Total quarter-over-quarter output is seen rising 0.4 percent in the first quarter versus 0.3 percent contraction in the fourth quarter. No change is expected for the annual reading versus fourth-quarter contraction of 0.2 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.)