Business activity continued to worsen in April, with the composite PMI falling to 47.3 from 48.0 in March, the eighth consecutive month of decline. Both manufacturing and services components fell in April, the first month where full data is available following the imposition of tariffs by the United States.

Activity in the industrial sector fell to 48.2 from 48.5 in March, while services contracted more sharply, with new business in the latter falling by the largest margin since November of 2020, helping to push the index to 46.8 from 47.9 in March.

Overall new business declined markedly in April, reflecting contracting in domestic demand, and prompting further private sector jobs cuts.

There is no getting around the fact French business activity is subdued, and uncertainly around tariffs will do nothing to change that. Still, the trade standoff could lead to increased European spending on defense which will bolster order books and production.

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.