Manufacturing activity was a little stronger than originally thought in April. At 44.5, the final sector PMI was up from its 44.0 flash estimate, but still 0.2 points short of its final reading in March. This was also its lowest reading since May 2020.

In part, headline weakness was due to a further improvement in supply chains where the sub-index hit a record high for a third consecutive month. Nonetheless, new orders continued to shrink, reflecting soft demand in general and efforts by clients to reduce high levels of stocks. That said, the rate of decline here was the slowest in 11 months, helped by a less weak performance by exports.

Manufacturing output rose but the increase was only marginal and headcount expanded by the least during the current 26-month sequence of positive growth. Purchasing activity was also very soft, posting the second-steepest drop since the initial Covid shutdowns in early 2020. Business sentiment improved to a 14-month high but remained low by historical standards.

Weak demand and lower energy charges saw input costs slide for a third successive month and at the fastest rate since December 2019. Output prices continued to rise but inflation slowed for the tenth time in the last year and to its lowest rate since January 2021.

The minor headline revision does nothing to alter the decidedly grim view of German manufacturing which looks likely to weigh on GDP growth this quarter. Easier supply chains will provide a boost but, with demand still contracting, the near-term outlook remains poor. Today's update puts the German ECDI at minus 17 and the ECDI-P at minus 7, both measures indicating that overall economic activity is running somewhat behind market expectations.

No revision is expected leaving the headline index at 44.0, down from March's final 44.7.

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 500 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 Markit 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.