Manufacturing activity held up a little better than originally thought in March. The 45.8 flash sector PMI was revised up to 46.2 but still stands nearly a full point below its final 47.1 reading in February and even further below the 50-expansion threshold.

Production, new orders and employment all continued to decline but the drop in new demand was the second smallest since January 2023 and the decrease in output was similarly less steep than in mid-quarter. In addition, businesses were cautiously optimistic about the outlook for the coming 12 months.

Inflation pressures continued to ease on the back of falls in both input costs and output prices.

The final data leave a generally depressed picture of French manufacturing. The sector may be over the worst, but a recovery would still seem to be some way down the road. However, today's update lifts the French RPI to 11 and the RPI-P to 25, both values indicating a modest degree of outperformance by overall economic activity.

No revisions are expected leaving the headline index at 45.8, down from February's final 47.1.

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.