| Consensus | Actual | Previous | |
|---|---|---|---|
| Composite Index | 44.2 | 44.6 | 44.8 |
| Services Index | 45.0 | 45.4 | 45.7 |
Highlights
Overall business activity was a little stronger than originally thought in January. The 44.2 flash composite output index was revised up to 44.6, now just 0.2 points short of its final December reading but still well in recession territory.
The upward revision largely came courtesy of a less weak performance by services where the 45.0 flash sector PMI was revised up to 45.4. That said, the latest print was still down from December's final 45.7 and indicative of the longest period of contraction in more than a decade. New business continued to decline as did backlogs although the fall in the later was the smallest in four months. Still, employment growth remained positive albeit only marginally, and service providers were slightly more optimistic about the outlook for the year ahead.
Input costs were up and the rate of inflation was well above the series long-run average with wages providing a significant boost. In turn, output price inflation climbed to a 7-month high.
In sum, the final January update still paints a miserable picture of the French economy and points to a weak first quarter for GDP. Even so, at 32 and 21 respectively, the RPI and RPI-P both show economic activity in general running well ahead of market expectations.
The upward revision largely came courtesy of a less weak performance by services where the 45.0 flash sector PMI was revised up to 45.4. That said, the latest print was still down from December's final 45.7 and indicative of the longest period of contraction in more than a decade. New business continued to decline as did backlogs although the fall in the later was the smallest in four months. Still, employment growth remained positive albeit only marginally, and service providers were slightly more optimistic about the outlook for the year ahead.
Input costs were up and the rate of inflation was well above the series long-run average with wages providing a significant boost. In turn, output price inflation climbed to a 7-month high.
In sum, the final January update still paints a miserable picture of the French economy and points to a weak first quarter for GDP. Even so, at 32 and 21 respectively, the RPI and RPI-P both show economic activity in general running well ahead of market expectations.
Market Consensus Before Announcement
No revisions are expected, leaving the key composite output index at 44.2, down from December's final 44.8.
Definition
The Composite Purchasing Managers' Index (PMI) provides an estimate of private sector output for the preceding month by combining information obtained from surveys of around 750 manufacturing and service sector companies. Results are synthesised into a single index which can range between zero and 100. A reading above (below) 50 signals rising (falling) output versus the previous month and the closer to 100 (zero) the faster is output growing (contracting). The report also contains the final estimate of the services PMI. The data are provided 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 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.
