The final data for January suggest that the economy expanded for the first time since last June. The 50.2 flash composite output index was nudged a tick higher and at 50.3, now stands a full point above December's final reading and, more importantly, back above the 50-expansion threshold.

Service activity was also a little firmer than originally thought with the 50.7 flash sector PMI revised up to 50.8, also now a full point above its final print at year-end and a 6-month high. New business was broadly stable, ending a 6-month sequence of declines but activity would have been softer but for a third successive fall in backlogs. Firms remain reluctant to shed staff and, indeed, headcount again rose and at the fastest rate since last October. Against this backdrop, business confidence in the year ahead climbed to an 8-month high.

Inflation developments were mixed with the rate of increase in input costs easing to a 13-month low but output prices being raised by more than in December. However, inflation rates for both remained historically elevated.

In terms of national composite output indices, the best performing member state was Ireland (52.0) which, along with Spain (51.6) and Italy (51.2), posted above the 50-mark. Germany (49.9) and France (49.1) were close enough to that level to indicate broad stagnation.

Taken at face value, the final January results keep alive the possibility that the Eurozone economy will avoid recession in 2023. Even so, with both domestic and overseas demand still soft and inflationary pressures high, the near-term outlook remains problematic at best. Today's update leaves the region's ECDI (24) and ECD-P (22) far enough above zero to indicate that overall economic activity continues to moderately outperform market expectations.

No revisions are expected to the flash data.

The Composite Purchasing Managers' Index (PMI) provides an estimate of private sector output for the preceding month by combining information obtained from surveys of the manufacturing and service sectors of the economy. Results are synthesised into a single index which can range between zero and 100. A reading above (below) 50 signals rising (falling) output versus the previous month and the closer to 100 (zero) the faster is output growing (contracting). The report also contains the final estimate of the services PMI. The data are provided by S&P Global using a representative sample of around 5,000 manufacturing and services companies, the former including Germany, France, Italy, Spain, the Netherlands, Austria, the Republic of Ireland and Greece and the latter Germany, France, Italy, Spain and the Republic of Ireland.

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.