The latest French manufacturing PMI showed that while factory activity remained in contraction at the start of 2025, the pace of decline has notably softened. The PMI rose to a seven-month high of 45.0 in January, up from 41.9 in December and 0.3 points below the consensus forecast, suggesting that the persistent downturn is losing intensity.

Key indicators show a fragile but improving landscape. New orders and exports, which have been a major drag, fell at a slower rate, with some firms even reporting a resurgence in client interest. Price competition remained fierce, with manufacturers offering discounts for the fourth consecutive month as cost pressures eased.

However, structural challenges persist. Manufacturers continue to cut employment, with January marking the 20th consecutive month of job losses. Firms also remained cautious, prioritising cash flow over inventory expansion. Despite this, business sentiment saw a slight uptick, with companies less pessimistic about future output.

In essence, while the sector is not out of the woods, the latest data hints at a potential turning point-where contraction gradually gives way to stabilisation, taking the French RPI to minus 4 and the RPI-P to 5. This means that economic activities are generally in line with market expectations of the French economy.

No revision from the 45.3 flash is the call for PMI manufacturing final.

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.