Overall private sector business activity contracted in February but by rather less than originally thought. The 47.7 flash composite output index was revised up to 48.1, some 3.5 points stronger than its final January mark and indicating the slowest pace of decline in nine months.

The positive headline revision was in part due to a less weak services sector where the 48.0 flash PMI was boosted to 48.4, also its best reading since last May. New orders continued to contract but by less than at the start of the year as export markets recorded a marked improvement. Employment growth accelerated to a 4-month high despite some companies not replacing voluntary leavers and another drop in backlogs was only modest and the least in seven months. Against this backdrop business expectations for the year ahead strengthened for a third successive month and optimism hit its strongest level since July 2023.

Less promisingly, February saw another steep increase in service providers' costs although this failed to prevent inflation from easing to a two-and-a-half year low. Output prices also continued to rise but by less than at the start of the year.

In sum, the revised data point to near-stabilisation in the French economy in mid-quarter. However, without a further improvement in March, GDP growth could still be negative. Today's update lifts the French RPI to 28 and RPI-P to 24, both measures showing economic activity in general running some distance ahead of market expectations.

No revisions are expected leaving the composite output index at 47.7, up from January's final 44.6.

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.

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.