| Consensus | Actual | Previous | |
|---|---|---|---|
| Index | 43.6 | 44.2 | 46.0 |
Highlights
Manufacturing activity remained depressed in September, adding to a growing body of data indicating that the French economy slowed sharply over the third quarter.
The final manufacturing PMI fell to 44.2. While that's an improvement from the flash estimate of 43.6, it was well below the 46.0 print in July, and represents the steepest drop in activity since May of 2020. The PMI has now declined for eight consecutive months.
New orders decreased rapidly, with survey respondents reporting reduced appetite from both domestic and international markets. Overall, the rate of contraction in new business was the fastest since October of 2022 and amongst the quickest in survey history.
French manufacturers relied on backlogs to sustain production taking industrials further into retrenchment mode; the drop in workforce numbers was commensurate with August's three-year record. Survey respondents noted the non-replacement of job leavers and the non-renewal of temporary contracts.
Manufacturers cut their prices for the fourth straight month, citing competitive pressures. The decrease in input prices was the weakest since June, but remained strong overall.
The latest data suggest that manufacturing could exert a negative influence on gross domestic product in the third quarter. The flash composite PMI for September, released last month, also pointed to a sharp deceleration in the service sector last month. However, the PMI surveys have been overly negative of late. The French RPI now stands at minus eleven, showing activity falling slightly behind market expectations, although the RPI moved to zero from minus 20 previously.
The final manufacturing PMI fell to 44.2. While that's an improvement from the flash estimate of 43.6, it was well below the 46.0 print in July, and represents the steepest drop in activity since May of 2020. The PMI has now declined for eight consecutive months.
New orders decreased rapidly, with survey respondents reporting reduced appetite from both domestic and international markets. Overall, the rate of contraction in new business was the fastest since October of 2022 and amongst the quickest in survey history.
French manufacturers relied on backlogs to sustain production taking industrials further into retrenchment mode; the drop in workforce numbers was commensurate with August's three-year record. Survey respondents noted the non-replacement of job leavers and the non-renewal of temporary contracts.
Manufacturers cut their prices for the fourth straight month, citing competitive pressures. The decrease in input prices was the weakest since June, but remained strong overall.
The latest data suggest that manufacturing could exert a negative influence on gross domestic product in the third quarter. The flash composite PMI for September, released last month, also pointed to a sharp deceleration in the service sector last month. However, the PMI surveys have been overly negative of late. The French RPI now stands at minus eleven, showing activity falling slightly behind market expectations, although the RPI moved to zero from minus 20 previously.
Market Consensus Before Announcement
No revision is expected leaving the headline index at 43.6, down from August's final 46.0.
Definition
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.
Description
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.
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.
