The flash data were unrevised in the final data for first quarter GDP. Total output was up 0.3 percent versus the fourth quarter of 2023 and 0.4 percent stronger on the year. The increase means that the economy emerged from near-recession in the second half of 2023.

The first look at the GDP expenditure components predictably showed another sluggish period for household spending which rose just a quarterly 0.2 percent, in line with its fourth quarter advance. Gross fixed capital formation was very weak, falling 1.5 percent and so easily reversing the previous period's 0.8 percent gain, while government consumption was only flat. Business inventories had another negative effect, subtracting a further 0.3 percentage points following a cumulative 0.7 percentage point hit in second and third quarters.

Consequently, headline growth would have been negative but for net foreign trade which added fully 0.8 percentage points. Exports increased 1.4 percent and imports dropped 0.3 percent.

Within the region's quarterly advance, France and Germany expanded 0.2 percent, Italy 0.3 percent and Spain 0.7 percent, all rates matching their earlier estimates. Elsewhere, Ireland (0.9 percent) emerged from recession and there was particularly strong growth in Malta (1.3 percent), Cyprus (1.2 percent) and Croatia (1.0 percent).

In sum, the unrevised first quarter report offers only limited evidence of the Eurozone economy starting to recover from the effects of earlier ECB tightening. Yesterday's cut by the central bank should help to accelerate the process but not by much with the key deposit rate only 25 basis points short of its record high and monetary policy still restrictive. Today's update puts the Eurozone RPI at minus 11 and the RPI-P at minus 22. Both readings show economic activity in general falling somewhat short of market expectations.

No revisions are expected in the final data leaving quarterly growth of 0.3 percent and an annual rate of 0.4 percent.

Gross domestic product (GDP) is the broadest measure of aggregate economic activity and encompasses every sector of the economy and is usually released early in the third month after the reference period. Following two provisional (flash) estimates containing only limited information, this report provides the first full look at the national accounts for the region.

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, which follow the international classification system (SNA93), 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 typically lead to increased demand for a local currency. However, inflationary pressures can put downside pressure on a currency regardless of growth. For example, if inflation remains above the ECB’s near-2 percent target for long enough, worries about the impact of lost competitiveness on the merchandise trade balance could prompt investors to switch to an alternative currency.