German manufacturing had a miserable March. Although the 41.6 flash PMI was revised up to 41.9, this still constituted a 5-month low and leaves the sector mired in recession.

Output (43.2 after 42.3) fell at only a slightly slower pace as in February and there were steeper declines in both employment and stocks of purchases. A decrease in new orders was less marked than previously but was similarly still sharp and reflected weak demand in both the domestic and overseas markets. However, looking ahead, firms were modestly optimistic about output prospects for the coming year. That said, while touching a 3-month high, expectations were still historically subdued.

Soft demand helped to reduce input cost inflation for a fourth successive month and the rate hit its lowest level since March 2023. Factory gate prices declined even more quickly on the back of strong competition for new work.

The March update puts the German RPI at 22 and the RPI-P at 34. Despite the dire state of manufacturing and a still bleak outlook, economic activity in general is holding up rather better than forecast.

No revisions are expected leaving the headline index at 41.6, down from February's final 42.5.

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 500 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 Markit 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.