February's deterioration in manufacturing activity was rather less steep than originally reported with the 46.1 flash sector PMI revised up to 46.5. Even so, this was still just short of January's final 46.6 and far enough below the 50-expansion threshold to signal another month of outright contraction.

That said, fresh falls in new orders and purchasing activity were the most shallow since March 2023 while the decline in output only matched the rate seen in January. However, backlogs were depleted at a slightly faster rate and employment was cut for a ninth month in a row. Business expectations were unchanged from January's 9-month high. Input costs continued to fall although at the slowest rate since March 2023, and factory gate prices were similarly trimmed further.

In terms of national PMIs, the best performing member state was Greece (55.7) which, alongside both Ireland (52.2) and Spain (51.5), was the only country to post above 50. The Netherlands (49.3) and Italy (48.7) were around stagnation levels, but fresh declines were recorded in France (47.1) and, in particular, Austria (43.0) and Germany (42.5).

The final February data offer little hope that recession in Eurozone manufacturing will be ending any time soon. However, there are at least some cautiously optimistic signs in the more forward-looking indicators that the worst may be over. In any event, for the ECB recent developments in the goods producing sector have carried no threat to its 2 percent inflation target. Today's update puts the Eurozone RPI at 6 and its inflation-adjusted counterpart RPI-P at 8. Economic activity in general is running just marginally hotter than forecast.

No revision is expected, leaving the headline index at 46.1, down from January's final 46.6.

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.