| Consensus | Consensus Range | Actual | Previous | |
| Composite Index | 48.6 | 50.1 | ||
| Manufacturing Index | 50.4 | 50.1 to 50.9 | 51.0 | 50.6 |
| Services Index | 50.5 | 50.2 to 50.6 | 47.9 | 50.2 |
Highlights
The private sector economy slipped back into contraction in January, with the composite PMI falling to 48.6 in January from 50.0 in December, as domestic political issues weighed on sentiment.
In a reversal of much of last year's dynamic, services were the drag on the overall result while manufacturing was the bright spot. Services fell into contraction with a reading of 47.9 versus 50.1 the previous month. At the same time, manufacturing rose to a 43-month high to 51.0 in January from 50.7 in December.
Economists were expecting manufacturing to be 50.4, according to the median forecast of an Econoday survey of forecasts. Services were pegged at 50.5.
The overall decrease in business activity was attributed to customers' restraint in placing new orders, citing an uncertain economic environment. Still, growth prospects were at their highest level since September of 2024, as firms expressed confidence that France's fiscal impasse will end in the coming months.
The manufacturing result offers optimism that the manufacturing sector might be poised to end its slump. Official data released earlier today also showed positive results for manufacturing.
Market Consensus Before Announcement
A mixed showing expected with manufacturing down a few ticks in January at 50.4 and services up a few at 50.5 from 50.7 and 50.1, respectively.
Definition
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.
Description
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.