Led by a strong contribution from trade, third quarter GDP surprised to the upside, gaining 0.5 percent from the second quarter when it grew 0.3 percent. Economists were expecting a 0.2 percent increase in the fourth quarter, according to the median forecast of an Econoday survey.

Exports grew 2.2 percent in the third quarter, while imports fell 0.4 percent during the quarter. That resulted in net trade contributing 0.9 percent to overall growth during the quarter. Among the sectors, transportation -- primarily aeronautics, exports rose 8.9 percent in the quarter.

The trade results more than offset a minus 0.6 percent contribution from changes in inventories, which reverses a 0.5 percent contribution in the second quarter. Results from other indicators show that companies in the absence of new orders have been working through order backlogs.

On the spending side, consumers remained subdued and cautious with spending up 0.1 percent in the third quarter, the same rate as in the second. Government spending was more robust, rising 0.5 percent in both the second and third quarters.

Overall, the French economy produced 0.8 percent more during the third quarter than the second, led by goods production, up 1.5 percent. Services grew a more subdued 0.2 percent during the quarter.

The results show the French economy is more resilient than expected in the face of US tariffs, and suggest that companies are finding markets other than the US for their goods. Strength in the high-value aeronautics sector is encouraging and could lead to restocking of inventories, giving the manufacturing sector a further boost.

The consensus sees GDP up 0.2 percent in Q3 from Q2 after a 0.3 percent rise in Q2.

Gross domestic product (GDP) is the broadest measure of aggregate economic activity and encompasses every sector of the economy. The flash estimate, released a relatively short 4-5 weeks after the end of the reference quarter, is an effort to speed up delivery of key economic data. In contrast to most European flash releases, the French version provides an early look at the GDP expenditure components.

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.