UK private sector business activity had a surprisingly buoyant February. The flash composite output index climbed from January's final 48.5 to 53.0, some 4 points above the market consensus and an 8-month high. This was its first print on the right side of the 50-expansion threshold since last July.

The headline gain was largely attributable to services where the flash sector PMI jumped from January's final 48.7 to 53.3, similarly an 8-month peak. However, its manufacturing counterpart also increased from 47.0 to 49.2 and within this output (51.6 after 47.0) returned to positive growth and hit a 9-month peak.

Aggregate new orders rose for the first time in seven months and by the most since May 2022. However, a solid gain in services masked another, albeit only small, fall in manufacturing. Still, the total increase was large enough to see overall backlogs increase and employment growth was the strongest since last October despite ongoing labour shortages. Business sentiment improved markedly and was the most optimistic in more than a year. The gain here was typically attributed to stronger pipeline demand, the restart of delayed projects and signs of a recovery in business investment.

Meantime, easing supply chain pressures helped overall input cost inflation ease for a third successive month. However, output prices still increased sharply, in part due to rising wages in services.

In sum, today's results should significantly reduce the likelihood of the UK economy sliding into recession in the first half of 2023. That said, signs of sticky inflation, especially in services, will not be wasted on the BoE and the likelihood of another hike in Bank Rate next month has just increased. Indeed, the February data lift the UK's ECDI to 14 and the ECDI-P to 33, the latter's strongest reading since early January and signalling clear outperformance by real economic activity in general.

Business activity in the UK has been struggling and is expected to continue to struggle in February, at a consensus 47.5 for manufacturing and 49.3 for services.

The flash Composite Purchasing Managers’ Index (PMI) provides an early estimate of current private sector business activity by combining information obtained from surveys of the manufacturing and service sectors of the economy, around 650 companies in each case. The flash data are released around ten days ahead of the final report and are typically based upon around 75-85 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 survey is produced 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 purchasing managers' surveys, investors will know what the economic backdrop is for the various markets. The flash PMIs are particularly closely watched as they provide a wide ranging look at economic developments and some of the most up to date information available. 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.