Manufacturing activity was a little firmer than originally thought at year-end. The 48.9 flash sector PMI was revised up to 49.2, now a full 2.0 points above November's final 47.2 but still on the wrong side of the 50-expansion threshold for a fourth straight month.

As shown in the preliminary report, output and new orders contracted for a seventh consecutive month although the declines in both were smaller than in mid-quarter. Export demand was notably soft. However, production would have fallen more sharply but for a reduction in backlogs and headcount was trimmed for the first time since January 2021. Vendor performance worsened to a greater extent than in November but supply-chain pressures were at their second-least intense since October 2020. Business confidence improved, but it remained historically subdued as inflation, recession concerns and high energy costs weighed on sentiment.

Inflation developments were mixed. Hence, input cost inflation dropped to its lowest rate in almost two years but its output price counterpart posted a slight acceleration.

Today's update suggests that French manufacturing activity continued to struggle last month and leaves fourth quarter GDP growth very likely to carry a negative handle. Moreover, with the French ECDI (minus 22) and ECDI-P (minus 21) still in negative surprise territory, any contraction could be somewhat steeper than currently anticipated.

No revision is expected to the flash reading.

The Manufacturing Purchasing Managers' Index (PMI) provides an estimate of manufacturing business activity for the preceding month by using information obtained from a representative sector survey incorporating around 400 companies. Results are synthesised into a single index which can range between zero and 100. A reading above (below) 50 signals rising (falling) activity versus the previous month and the closer to 100 (zero) the faster is activity growing (contracting). The data are released by S&P Global.

Investors need to keep their fingers on the pulse of the economy because it dictates how various types of investments will perform. By tracking economic data such as the ISM manufacturing index in the U.S. and the S&P Global PMIs elsewhere, investors will know what the economic backdrop is for the various markets. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers less rapid growth and is extremely sensitive to whether the economy is growing too quickly and causing potential inflationary pressures..

The S&P Global PMI manufacturing data give a detailed look at the manufacturing sector, how busy it is and where things are headed. Since the manufacturing sector is a major source of cyclical variability in the economy, this report has a big influence on the markets. And its sub-indexes provide a picture of orders, output, employment and prices.