Private sector business activity was less weak than originally reported in March. The 47.7 flash composite output index was revised up to 48.3 to stand 0.2 points stronger than its final February print and at a 10-month high. That said, it remained short of the 50-expansion threshold.

In part the positive headline revision was attributable to a stronger revised performance by services where the 47.8 flash sector PMI was revised up to 48.3, now just 0.1 point below its February reading. New business continued to decline and at a slightly faster rate than in mid-quarter but still only modestly. Employment posted its strongest increase since last October while backlogs fell slightly. Of note, business expectations for the year ahead climbed to their highest mark in 20 months.

Cost pressures eased slightly but remained high by historical standards mainly due to faster wage growth and more expensive energy. Even so, the inflation rate slowed to its weakest mark since August 2021. Output price inflation was little changed.

Overall, the March results remain soft and, irrespective of improving sentiment, still point to a weak first quarter for GDP. Nonetheless, with the French RPI and RPI-P at 11 and 25 respectively, economic activity in general is running somewhat faster than anticipated.

No revisions are expected leaving the composite output index at 47.7, down from February's final 48.1.

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.