While not quite as bad as July, August was another poor month for Eurozone manufacturing. The 43.7 flash sector PMI was revised down to 43.5 and so now stands 0.8 points above its final print at the start of the quarter but below the 50-expansion threshold for the fourteenth month in a row.

Last month was characterised by further sharp decline in new orders which in turn helped to ensure another steep drop in output. Total and foreign order books have been contracting for well over a year and backlogs have now been depleted for 15 consecutive months. Employment was also trimmed for a third month in a row, albeit only marginally as firms remain reluctant to let staff go. Still, despite the gloomy overall picture, business expectations for the year ahead climbed to a three-month high. That said, they remained well short of their historic norm. Input costs declined markedly and for a sixth successive month while factory gate prices were also slightly lower than in July.

In terms of national PMIs, the best performing member state was Greece (52.9) which, alongside Ireland (50.8), was the only country posting above the 50 mark. Spain (46.5), France (46.0), the Netherlands (45.9) and Italy (45.4) all lagged well behind but it was Austria (40.6) and Germany (39.1) that were the deepest in recession territory.

Third quarter Eurozone manufacturing is shaping up very poorly and the sector should be a drag on real GDP growth. With signs that this is beginning to feed through to services, prospects for economic activity in general through year end are looking increasingly poor. Moreover, with the region's ECDI now at minus 38 and the ECDI-P at minus 49, the economy is already falling well short of market expectations.

No revision is expected to the flash data leaving the headline index at 43.7, up from July's final 42.7.

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 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.