The French manufacturing sector improved for the fifth consecutive month, and while still in contraction, it is poised to cross the threshold into expansion. The manufacturing PMI for May rose to 49.8, improving from the flash reading of 49.5 and beating the consensus.

Although US tariff policy continues to weigh on the sector, there were positive developments as output rose for a second consecutive month, leading to increased factory employment. Business confidence rose to its highest reading since February 2022.

Price discounting was a big factor in stimulating demand, with the pain mitigated in part by moderating input prices. Cost pressures did weigh on inventories as manufacturers reduced their stockpiles. But on a more positive note, some inventories were reduced to fill orders which couldn't be filled by current production.

Business expectations are much improved from the end of last year, with a view towards increased military spending and more accommodative monetary and fiscal policy.

These are certainly encouraging signs, but the remaining big unknown is US trade policy which. Although meandering through the US court system, the US administration again remains commitment to its tariff policy.

Today's results put the Econoday Relative Performance Index at plus 6 from minus 5, with the RPI-P moving to plus 2 from minus 4.

No revision from the 49.5 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.