France's private sector witnessed a surprising yet fragile resurgence in August, marking its first expansion since April, driven by a robust performance in services. The composite index climbed to 52.7, its highest since March, signalling overall growth. However, this progress masked underlying weaknesses. Manufacturing continued its downward spiral, with factory orders plummeting at the sharpest rate in four years, dragging overall new business down for a third consecutive month.

Despite the boost from services, job creation stalled, with employment in manufacturing falling at its fastest pace in over four years. The outlook for the next year also dimmed, as optimism slipped to its lowest level in nearly a year, weighed down by political uncertainty, real estate challenges, and high interest rates.

While cost pressures eased, businesses increased their prices at the quickest rate since January, indicating that inflationary challenges persist. This mixed picture highlights the delicate balance in France's economy, where the strength in services struggles to offset manufacturing woes, casting a shadow over sustained recovery, leaving the RPI at minus 1 and RPI-P at 3.

The flash composite output index is seen dipping from July's final 49.1 to 48.9. The Paris Olympics might have had some impact.

The flash Composite Purchasing Managers' Index (PMI) provides an early estimate of current private sector business activity by combining information obtained from surveys of around 1,000 manufacturing and service sector companies. The flash data are released around ten days ahead of the final report and are typically based upon around 85 percent of the full survey sample. Results covering a range of variables including manufacturing output, employment, new orders, backlogs and prices 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 report also contains flash estimates of the manufacturing and services PMIs. The data are produced 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.