Manufacturing activity was slightly weaker than originally thought in August. The 46.4 flash sector PMI was trimmed to 46.0 in the final data, narrowing its gain versus its final 45.1 print in July to 0.9 points. Operating conditions have now deteriorated for seven straight months.

The latest downturn reflected another sharp decline in new orders, notably in intermediates and investment goods. Production volumes followed suit, falling for a fifteenth month in a row. Purchasing activity decreased at one of the fastest rates in the last three years and headcount was reduced significantly. Backlogs were also cut. Against this backdrop, manufacturers became the most pessimistic since May 2020.

Input costs decreased steeply and at a pace little changed from July's 11-year record. As a result, factory gate charges were also pared for a third straight month and by the most since August 2016.

The final data do nothing to brighten a generally dismal picture of French manufacturing which looks all the more likely to subtract from third quarter GDP growth. The French ECDI now stands at 5, but only due to surprisingly firm prices at minus 19, the ECDI-P shows that the real economy is underperforming market expectations.

No revision is expected to the flash data leaving the headline index at 46.4, up from July's final 45.1.

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 400 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 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.