The manufacturing sector endured another bad month at the start of the quarter. At 45.8, the final PMI was actually 0.3 points stronger than its flash estimate but still 1.5 points short of March's final 47.3 and indicative of the worst period for activity in nearly three years.

Manufacturing output (48.5 after 50.4) slipped back into contraction territory and registered a four-month low. The drop here reflected a twelfth successive fall in new orders, which declined at an accelerated rate and the fastest in four months. Weakness was seen in both the domestic and overseas markets. Spare capacity was apparent with backlogs again falling and by the most since last November. Consequently, purchasing activity fell more sharply than at any time in the last five months. Supply delivery times shortened at a record pace and pre-production inventories were depleted by the most since January 2021. Job creation remained positive but was the slowest since February 2021. Even so, manufacturers were optimistic about the outlook for the year ahead and confidence improved slightly versus March.

Inflation news was generally positive, with input costs falling for a second consecutive month and factory gate prices rising by the least since November 2020.

In terms of national PMIs, the best performing member state was Greece (52.4), which was the only country to post above the 50-expansion threshold. Spain (49.0) and Ireland (48.6) were close to stagnation but Italy (46.8), France (45.6), Netherlands (44.9), Germany (44.5) and Austria (42.0) were all well in recession territory.

The final manufacturing data make for a miserable start by the sector to the current quarter and suggest little, if any, boost to the period's real GDP growth. Today's update puts the Eurozone ECDI at 14 and the ECDI-P at 16, indicating that overall economic activity is running slightly ahead of market expectations.

No revision is expected leaving the headline index at 45.5, down from March's final 47.3.

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.