Private sector business activity expanded for a second successive month in February but at a slightly slower rate than originally reported. At 52.0, the final composite output index was 0.3 points short of its flash estimate but still easily on the right side of the 50-expansion threshold and 1.7 points above its final print in January. It was also an 8-month high.

The negative headline revision was attributable to services where the 53.0 flash sector PMI was trimmed to 52.7 although this too was also an 8-month peak. New orders rose at a moderate pace and by the most since May 2022 and this encouraged a rate of job creation that was slightly faster than its long-term average. Even so, backlogs advanced and at the fastest rate since last June. Against this backdrop, business sentiment about the next 12 months rose to its highest level since last April. Input costs again increased significantly and the rate of inflation was slightly higher than at the start of the year. Output price inflation was little changed and so remained amongst the strongest on record.

Regionally in terms of national composite output indices, the best performing member state was Spain (55.7) followed by Ireland (54.5). However, Italy (52.2), France (51.7) and Germany (50.7) were also all above the 50-mark.

Taken at face value, the latest PMI readings point to first quarter Eurozone GDP growth of around 0.3 percent. Nonetheless, the larger states are generally lagging the smaller countries and the manufacturing sector as a whole is clearly still struggling. In addition, inflationary pressures remain uncomfortably strong, so the ECB has more work to do. Today's update puts the Eurozone's ECDI at minus 13 and the ECDI-P at a lowly minus 43, its weakest reading since last June.

No revisions are expected to the flash report.

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.