After flirting with moving into an expansionary phase in May, France's manufacturing sector instead contracted for the 29th consecutive month. The final PMI reading was 48.1 in June, a slight improvement from the flash reading of 47.8.

The decline is likely further evidence that businesses are cautious because of uncertainty around US trade policy. This is reflected in declining export orders and new orders, which saw their steepest drop in four months.

While current conditions are certainly not favorable, businesses are optimistic about the twelve months hence, with the outlook increasing for the eight straight month to its highest level since February 2022. As a result, firms have increased hiring slightly.

The European Central Bank cutting interest rates and the outlook for increased defense spending is buoying the outlook. The dollar is off to its worse start since 1973, something that would normally be a positive for European economies. But the volatile nature of US trade policy makes it difficult for companies to plan with any certainty.

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.