The final report for February confirmed a surprisingly buoyant period for UK private sector business activity. The 53.0 flash composite output index was revised a tick firmer to 53.1, signalling a return to positive growth following six months of contraction. The latest reading was up from January's final 48.5 and signalled the strongest increase since June last year.

The minor headline revision was partly due to services where the 53.3 flash sector PMI was boosted to 53.5, also its best reading in eight months. New orders expanded after six months of decline and by the most in nine months. The rise here included stronger demand from overseas, notably the U.S., and this helped to ensure further additions to headcount. However, the increase in jobs was again limited by a shortage of skilled workers which, in turn, contributed towards another rise in backlogs. Business sentiment improved markedly and was the most optimistic in nearly a year.

Meantime, easing supply chain pressures helped overall input cost inflation to ease for a third successive month. Even so, higher wages were a key factor in what was still another solid increase. Indeed, output prices continued to rise sharply and the rate of inflation slowed by much less than its input cost counterpart.

In sum, today's update suggests that the UK economy should avoid 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 Bank Rate still looks likely to be hiked again later this month. To this end, the fact that both the UK's ECDI (36) and ECDI-P (46) now stand well in positive surprise can only add to pressure on the bank to tighten further.

No revisions are expected to the flash report.

The Services Purchasing Managers' Index (PMI) provides an estimate of service sector business activity for the preceding month by using information obtained from a representative sector survey incorporating transport and communication, financial intermediation, business services, personal services, computing and IT and hotels and restaurants. 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 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 non-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 services data give a detailed look at the services sector, how busy it is and where things are headed. The indexes are widely used by businesses, governments and economic analysts in financial institutions to help better understand business conditions and guide corporate and investment strategy. In particular, central banks in many countries use the data to help make interest rate decisions. PMI surveys are the first indicators of economic conditions published each month and are therefore available well ahead of comparable data produced by government bodies.