Manufacturing activity was marginally weaker than originally thought at the start of the year. The 43.2 flash sector PMI was trimmed to 43.1, now 1 point above its final December reading and deep in contraction territory. Even so, the January print was still a 4-month high.

Another sizeable decline in new orders ensured a further steep drop in output and production would have been even weaker but for an additional paring of outstanding orders. Consequently, employment declined although this largely reflected the non-replacement of voluntary leavers. Looking ahead, firms remained pessimistic about the coming 12 months despite confidence climbing to a 6-month high.

Despite the problems in the Middle East, input costs fell for a second straight month and by the most since last September. In turn, factory gate prices were also reduced slightly.

In sum, the final data do nothing to alter a very weak picture of French manufacturing at the start of 2024. Moreover, prospects for the quarter as a whole, continue to look gloomy. However, today's update puts the French RPI at 14 and RPI-P at exactly zero implying that overall economic activity is at least keeping up with market expectations.

No revisions are expected to the flash data leaving the sector PMI at 43.2, up from December's final 42.1.

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.