Germany's GDP showed no quarterly growth in the third quarter in line with the forecast expectations, held back mainly by weak exports, which fell by 0.7 percent, particularly in service-related export categories. At the same time, domestic demand offered only limited support. Household consumption declined for the first time in nearly two years, reflecting reduced spending on food services and accommodation. Government consumption was the only clear positive driver.

Investment activity provided some modest encouragement, with machinery and equipment rising by 1.1 percent, although construction continued to contract. The services sector remained the most resilient part of the economy, especially information and communication and hospitality-related activities, while manufacturing and construction extended their downward trajectory.

Year-over-year, GDP increased by a modest 0.3 percent, in line with expectations and supported by higher consumer spending and stronger government expenditure, though capital formation and exports weakened. Employment levels held broadly steady, and labour productivity improved slightly. Rising wages fuelled higher consumption, but this came at the cost of a reduced savings ratio.

Compared with other major EU economies, Germany's performance remained subdued, underscoring ongoing structural challenges in trade-exposed and construction sectors. This latest update takes the RPI to minus 31 and the RPI-P to minus 39, indicating that economic activity continues to fall short of expectations for the German economy.

Forecasters see no change from the flash at 0.0 percent on quarter and 0.3 percent on year for Q3.

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.