In the third quarter of 2024, Germany's GDP rose modestly by 0.2 percent from the previous quarter, well above the market consensus and aided by increased government and household spending. This follows a slight downward revision for Q2 to minus 0.2 percent from minus 0.1 percent, highlighting a very fragile economic trajectory.

Compared with the same period in 2023, and adjusting for both price and calendar effects, GDP slipped by 0.2 percent, in line with the consensus. However, when adjusted for price alone, the GDP showed a mild 0.2 percent rise.

While stronger than expected last quarter, the German economic recovery remains sluggish at best, reflecting in part broader fiscal adjustments and weak private demand. Still, today's update takes the RPI to 31 and the RPI-P to 41, both readings showing economic activity in general running well ahead of market forecasts.

Contraction again for Germany with the consensus for GDP at minus 0.1 percent in Q3 from Q2, and minus 0.2 percent from a year ago.

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.