The UK manufacturing PMI plummeted to a 5-month low in September. At 46.2, the manufacturing PMI was unchanged from both the flash estimate and the consensus. It illustrates faster contraction compared to August.

Manufacturers continued to experience falling output, new orders, employment and purchasing stocks. Decline in demand was reported in both domestic and international markets. Exports have declined over the last 3; however, this has been exacerbated by concerns over tariffs, rising energy costs and client uncertainty. Orders from the US, the EU, the Middle East and Asia all fell. Supply chains were also disrupted due to production shutdown at Jaguar Land Rover. Unsurprisingly, this led to subdued business optimism in September over the next 12 months. Input cost and selling price inflation eased to a 9-month low.

Today's update puts the UK RPI at minus 2 and the RPI-P at minus 2. Overall, the economy in general is performing within market expectations.

The consensus see the index unrevised from the flash at 46.2 and down from 47.0 in August.

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.