The final UK manufacturing PMI fell to a 17-month low. At 44.9, it is up from the flash estimate of 44.6 but down from February's final of 46.9. This implies contraction in activity for the sixth consecutive month.

As this was the sixth consecutive print below the 50-growth threshold, it reflects declines in output, new orders, employment and client confidence. Production fell for the fifth month in a row. Low client confidence and a 6.9 point drop in new orders led to a much lower output in March than February. This was widespread across consumer, intermediate and investment goods.

Amid geopolitical tensions, economic uncertainty, the changes to minimum wage legislation and employer national insurance contributions (NICs) announced last year and possible tariffs led to a tough trading environment as stated in the report. Business optimism slumped to a two and a half year low.

Still, March saw the rate of input price inflation ease from February's 25-month high. Selling prices rose the fastest since April 2023.

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 3,000 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 survey covers more than 600 industrial companies and is compiled by the Chartered Institute of Purchasing and Supply (CIPS) and 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 and 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 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.