The French manufacturing sector demonstrated signs of resilience in March, edging closer to stability as the manufacturing PMI rose to a 26-month high of 48.5, up from 45.8 in February. Though still below the neutral 50.0 mark, the rate of contraction was the slowest in over two years, suggesting a potential turning point. Growth in consumer goods output played a key role in offsetting broader declines, with firms in this segment even expanding their workforce. While new orders and output continued to decline, the rate of decline was much softer, and overseas demand showed signs of revival, particularly from parts of Africa and Asia.

However, pressures persisted. Operating costs surged due to currency effects and supplier pricing, though factory gate prices continued to fall amid stiff competition. Employment cuts persisted, but at a slower pace, and businesses maintained cautious optimism, with confidence hitting a nine-month high despite lingering concerns over geopolitical risks and consumer demand. Overall, the sector appears to be emerging from a prolonged downturn, led by consumer goods producers and a slow recovery in global demand. The latest update leaves the RPI at minus 14 and minus 10, meaning that economic activities are slightly behind market expectations of the French economy.

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.