Manufacturing weakness was not quite as marked as originally thought last month but March was still a poor period for the sector. At 47.3, the final PMI was 0.2 points stronger than its flash estimate but well short of the 50-expansion threshold and a 4-month low. Eurozone manufacturing remains in the doldrums.

Manufacturing output (50.4) actually crept a little higher but only on the back of declining backlogs as new orders shrank again and at much the same pace as in February. Purchasing activity was cut significantly and stocks of purchases fell at their fastest pace since May 2021. Shortages of staff helped to ensure that employment expanded at much the same modest pace as in mid-quarter but business expectations still hit a 3-month low.

More positively, weak demand and reduced production requirements helped to alleviate supplier bottlenecks and average vendor delivery times shortened by the most on record. This, alongside lower energy costs, led to the first decrease in input costs in almost three years. Factory gate charges continued to rise, but the rate of output price inflation eased to a 26-month low and was only marginally stronger than its historical average.

Regionally in terms of national PMIs, the best performing member state was Greece (52.8) which, together with Spain (51.3) and Italy (51.1), posted positive growth. Ireland (49.7) was not far behind and well ahead of France (47.3), the Netherlands (46.4) and, in particular, Germany and Austria (both 44.7).

Taken at face value, today's update suggests that Eurozone manufacturing activity will shrink this quarter and so limit what still looks likely to be positive overall GDP growth. The revised data put the Eurozone's ECDI at 4 and the ECDI-P at 9, both values indicating that economic activity in general is running much as expected.

No revision is expected to the flash 47.1 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 3,000 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). Released by S&P Global, national data are included for Germany, France, Italy, Spain, the Netherlands, Austria, the Republic of Ireland and Greece. These countries together account for an estimated 89 percent of Eurozone manufacturing activity.

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.