Private sector business activity was revised a good deal firmer in the final data for year-end. The 48.0 flash composite output index was boosted to 49.1 and now stands 0.4 points above its final reading in October, albeit still short of the 50-expansion threshold for a second consecutive month.

The positive headline adjustment was largely attributable to services where the 48.1 flash sector PMI was revised up to 49.5, now little changed from November's final 49.3. Even so, it too was still below the key 50-mark. In fact, incoming new business declined at one of the fastest rates in almost two years with export demand notably soft. Despite this, backlogs edged a little higher having decreased for the first time in 20 months in November. Payrolls continued to expand, but while the increase here was slightly larger than in mid-quarter it was still less than the long-run average. Similarly, while service companies were optimistic about prospects for 2023, business confidence was still historically subdued.

Cost pressures were again elevated, and the inflation rate accelerated slightly, in part due to rising wages. However, although output price inflation was also high, it slowed to its weakest mark in four months.

Today's update suggests that the French economy shrank again last month, albeit by less than previously seemed likely. As such, the likelihood is that GDP growth turned negative in the fourth quarter. To this end, although surprisingly soft inflation data have reduced the French ECDI to minus 15, a reading of 5 on the ECDI-P suggests that the downturn in real economic activity in general should be no more than currently anticipated.

No revisions are expected to the flash data.

The Composite Purchasing Managers' Index (PMI) provides an estimate of private sector output for the preceding month by combining information obtained from surveys of around 750 manufacturing and service sector companies. Results are synthesised into a single index which can range between zero and 100. A reading above (below) 50 signals rising (falling) output versus the previous month and the closer to 100 (zero) the faster is output growing (contracting). The report also contains the final estimate of the services PMI. The data are provided 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 purchasing managers' manufacturing indexes, 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.