In the third quarter of 2024, GDP grew by 0.4 percent, in line with the flash and consensus estimates and driven primarily by the economic activity surrounding the Paris Olympic and Paralympic Games. Household consumption rebounded by 0.6 percent due to increased spending on services, including event ticket sales, and a modest recovery in goods consumption. However, gross fixed capital formation fell 0.7 percent, signalling persistent challenges in investment.

Exports and imports both declined, with exports down 0.8 percent and the latter 0.6 percent, leading to a marginal 0.1 percent hit from foreign trade on GDP growth. Inventory changes added just 0.1 point.

Household purchasing power improved significantly by 0.7 percent, buoyed by rising social benefits and a sharp drop in income taxes, despite a deceleration in wages. The household savings rate increased to 18.2 percent, reflecting cautious consumer behaviour amid economic uncertainty.

Non-financial companies experienced a strong recovery in profit margins (1.2 percentage points to 32.4 percent), boosted by favourable terms of trade and Olympic-related revenues. However, the general government borrowing requirement worsened to 6.3 percent of GDP, driven by rising public expenditure and declining tax revenues.

Today's report confirms the impacts of one-off events on growth, investment, and fiscal stability. It also puts the French RPI at minus 25 and the RPI-P at minus 15, meaning that economic activity in general is underperforming market expectations.

No revisions are expected to the provisional estimate.

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 four weeks earlier, the second report incorporates additional data to provide a more accurate reading. This is also revised in the final report, published in the third month after the reference quarter.

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.