Business activity was a little weaker than originally reported in March, but growth was still the fastest since May 2022. At 53.7, the final composite output index was 0.4 points below its flash reading but still well above the final 52.0 recorded in February.

The negative revision to the headline index reflected a slightly softer service sector although at 55.0, down from a 55.6 flash outturn, growth here also saw a 10-month peak. New business expanded at a rate above its long run average and was reflected in another increase in backlogs which climbed more steeply than at any time since the middle of last year. Consequently, employment continued to rise, and the rate of job creation accelerated to a 9-month high. Even so, rising cost pressures led to a modest decline in business confidence which fell further below its long run average.

To this end, both input cost and output price inflation were a little lower than in mid-quarter but remained historically very firm.

Regionally in terms of national composite output indices, the best performing member state was Spain (58.2) which was some way ahead of Italy (55.2). However, Ireland (52.8), France (52.7) and Germany (52.6) were all in positive growth territory.

The updated March results still point to first quarter Eurozone GDP growth of around 0.3 percent. Improving demand and decelerating inflation bode well but the recovery remains dependent upon services and with the labour market still tight, rising costs are still a threat over at least the near-term. Accordingly, another ECB tightening in May is probable. The latest data reduce the region's ECDI to minus 15 and the ECDI-P to minus 9. Both readings show overall economic activity falling a little short of market expectations but, until inflation is brought back under control, the ECB will remain biased towards higher interest rates.

No revisions are expected.

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.