Manufacturing activity was slightly weaker than originally thought in September. The final sector PMI weighed in at 39.6, down a couple of ticks versus its flash estimate and now only 0.5 points above its final reading in August.

Production declined for a fifth consecutive month and at a marginally faster rate than in August. New orders were sharply lower although the rate of decline was the slowest since June. Backlogs essentially followed suit and employment dropped for a third straight month. However, the pace of job shedding was still relatively modest. Purchasing activity was markedly weaker with a rate of decline little changed from August's 39-month record. Against this backdrop, business expectations for the year ahead slipped to their lowest level since November 2022.

Meantime, weak demand added to downside pressure on input costs which fell for an eighth time in as many months.

Taken at face value, today's update suggests manufacturing output fell by around 1 percent last quarter. Moreover, with orders still declining rapidly, the near-term outlook is for more of the same. The September update trims the German RPI to 6 and the RPI-P to 10 but leaves both measures indicating a limited degree of overall economic outperformance versus expectations.

No revision is expected leaving the headline index at 39.8, up from August's final 39.1.

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 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.