At 49.6 the final PMI composite index for September was below the 50.0-growth threshold and at 7 month low. It was 1.4 points less than in August but 0.7 points stronger than the flash estimate. This signals that while the industry is contracting, the latter half of September outperformed the earlier part of the month.

Another decrease in new orders prompted a fresh fall in factory output and backlogs also decreased again. Employment was cut as layoffs intensified and business optimism weakened despite easing cost pressures where inflation was the second-slowest since November 2020.

The service index for September was 51.4, also lower than in August (52.9) but still signalling a modest expansion. Even so, new business decreased for the first time since February, albeit only marginally. Outstanding orders were run down to support activity and employment continued to rise. Services inflation cooled and optimism for the next 12 months strengthened.

At the national level, the best-performing countries were Spain (56.3) and Ireland (52.1), both of which saw an expansion of business activities. The weaker performing countries were Italy (49.7), France (48.6) and Germany (47.5), all of which fell short of 50-growth threshold.

Today's update puts the Eurozone RPI at minus 19 and the RPI-P at minus 5, the gap between the two gauges reflecting surprisingly soft inflation which might well equate with another ECB ease later this month.

No revisions are expected to the flash data.

The Composite Purchasing Managers' Index (PMI) provides an estimate of private sector output for the preceding month by combining information obtained from surveys of the manufacturing and service sectors of the economy. 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 using a representative sample of around 5,000 manufacturing and services companies, the former including Germany, France, Italy, Spain, the Netherlands, Austria, the Republic of Ireland and Greece and the latter Germany, France, Italy, Spain and the Republic of Ireland.

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.