Germany's GDP rose by 0.1 percent in the third quarter of 2024, a 0.1 percentage point downward revision to the provisional estimates and making for a very modest recovery after a subdued first half of the year. This marks a minor improvement from the minus 0.3 percent revised decline in the second quarter but remains 0.3 percent lower than a year earlier.

Household and government spending provided slight boosts, with consumption up 0.3 percent quarter-over-quarter. However, gross fixed capital formation in machinery and construction declined further, dampening investment growth. Exports dropped significantly by minus 1.9 percent while imports rose by 0.2 percent ensuring a negative contribution from net foreign trade.

Sectoral trends were mixed. Manufacturing and construction faced sharp contractions, whereas public services, education, and health showed resilience. The service sector grew overall year-over-year, driven by gains in information and communication.

Labour productivity stagnated, and employment saw its first seasonally adjusted decline since 2021. Nonetheless, nominal incomes rose by 2.8 percent, with a higher savings rate (10.6 percent) reflecting cautious consumer behaviour.

The data show ongoing structural challenges, with limited domestic demand and weak external trade impeding a stronger recovery. This update takes the RPI to minus 18 and the RPI-P to minus 32. This means that economic activity in general is well behind market expectations.

No revision is the call for German GDP at 0.2 percent on the quarter and minus 0.2 percent on year.

Gross domestic product (GDP) is the broadest measure of aggregate economic activity and encompasses every sector of the economy. Following the release of the flash estimate about two weeks earlier, the second report incorporates additional data to provide a more accurate reading. It also contains details of the key GDP expenditure components and full national accounts.

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 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.