Manufacturing activity was slightly stronger than originally thought in February. The 46.8 flash sector PMI was revised up to 47.1, now fully 4 points above its final reading at the start of the year. Although this signalled a 13th straight month of contraction, this its the highest level since March 2023.

Both output and new orders continued to fall but at markedly slower rates than in January, the decline in the former being the least steep in just over a year. In turn, this was reflected in the smallest decrease in purchasing activity since the middle of 2022. In a similar vein, although employment was pared further, the drop here was the shallowest since last September and attributable to the non-replacement of leavers and temporary workers. Business expectations about the coming year turned optimistic for the first time since last May.

Disruptions to traffic in the Red Sea led to a lengthening in vendor delivery times but input costs decreased further and factory gate prices were also reduced.

French manufacturing would still appear to be contracting but the February PMI data at least suggest that the worst of the downturn has now passed. Goods production may have a small positive impact on first quarter GDP growth. Today's report lifts the French RPI to 28 and the RPI-P to 29, both measures showing economic activity in general running some way ahead of market expectations.

No revision is expected, leaving the headline index at 46.8, up from January's final 43.1.

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.