The final data for September confirmed a miserable quarter for Eurozone manufacturing. At 43.4, the index was unrevised from its flash reading and although only a 2-month low, indicative of a sharp contraction in the sector's business activity.

Ominously, new orders continued to decline at a near-record rate reflecting acute weakness in both the domestic and overseas markets. Backlogs were also trimmed again in an effort to support output and the decline here was the joint fastest since May 2020. Consequently, headcount was reduced by the most in almost three years. Business confidence in the year ahead similarly deteriorated markedly and hit a 10-month low. Efforts to boost competitiveness and stimulate demand saw factory prices lowered for a fifth successive month and at a pace matching the fastest seen in the last 14 years. Input costs also recorded a steep drop.

In terms of national PMIs, only Greece (50.3) managed to beat the 50-expansion threshold. Ireland (49.6) was close but Spain (47.7) and Italy (46.8) were some way adrift although still much closer than France (44.2), the Netherlands (43.6) and Austria and Germany (both 39.6).

Manufacturing looks likely to have been a sizeable drag on third quarter Eurozone GDP growth and the ongoing slump in demand offers little hope of any near-term improvement. Today's update puts the Eurozone's RPI at 1 although this masks a somewhat stronger than expected performance by the real economy as shown in an RPI-P of 23.

No revision is expected leaving the headline index at 43.4, barely changed from August's final 43.5.

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.