The French economy remained weak at the start of the fourth quarter, although activity was slightly less subdued than in September, according to the flash purchasing management data.

The October composite PMI index rose to 45.3, according to a preliminary estimate, beating the consensus forecast of 44.2, and improving upon September's final 44.1.

Manufacturing activity continued to weaken, with the flash PMI retreating to 42.6, a 41-month low. That's well below both the consensus forecast of 44.8 and September's final 44.2. The manufacturing output index took an even bigger hit, slumping to 41.7 from 42.6 in September.

The service sector did most of the heavy lifting in the slightly better October result, rising to 46.1, well above the consensus forecast of 44.6 and September's final 44.4.

Despite the improvement, the October reading represented the second biggest contraction in nearly three years. The PMI survey found considerable weakness on the demand side, with new orders falling for the sixth straight month and sales to non-domestic customers plummeting.

The October survey also revealed a month-over-month decline in private sector employment, the first in nearly three years. That's an early suggestion of a bit of slack in the European labour market; Eurozone unemployment has remained at record lows, even as growth in the bloc has stagnated in recent quarters.

Nonetheless, input prices increased by their fastest pace since May, although selling price inflation cooled, with firms struggling to pass on higher costs to customers.

The flash data suggest a decline in third quarter activity, although PMI surveys have been markedly softer than official statistics of late and could overstate the expected economic slowdown in the third quarter.

The Banque de France sees the economy managing a 0.1 percent expansion in the third quarter, after a perky 0.5 percent rise in the previous three months. The first estimate of third quarter French gross domestic product is due on October 31st.

The French RPI now stands at 4 and the RPI-P at 25, with the latter measure showing the real economy outperforming expectations.

The key flash composite output index is seen at 44.2, up marginally from September's final 44.1 but still in recession territory.

The flash Composite Purchasing Managers' Index (PMI) provides an early estimate of current private sector business activity by combining information obtained from surveys of around 1,000 manufacturing and service sector companies. The flash data are released around ten days ahead of the final report and are typically based upon around 85 percent of the full survey sample. Results covering a range of variables including manufacturing output, employment, new orders, backlogs and prices 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 report also contains flash estimates of the manufacturing and services PMIs. The data are produced 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 purchasing managers' manufacturing indexes, 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.