Private sector business activity continued to expand this month and at a slightly faster rate than in mid-quarter. The flash composite output index weighed in at 53.8, up from March's final 52.7 and a full point stronger than the market consensus. The latest reading was also an 11-month high.

However, in line with March, overall growth was restricted to services where the flash sector PMI jumped from March's 53.9 to a very robust 56.3, also an 11-month peak. By contrast, its manufacturing counterpart fell from 47.3 to just 45.5, deep in recession territory and a 35-month low. Manufacturing output (41.9) was similarly weaker than at any time in nearly three years.

Aggregate new orders rose again but the increase here was also restricted to services as manufacturers posted another and accelerated decline. Employment expanded too but, again, mainly due to services, and backlogs were up again, suggesting some pressure on capacity. Business confidence improved slightly and sentiment in manufacturing at least moved back into positive territory.

Meantime, input cost inflation slowed to a 20-month low although it remained historically high. Output prices continued to rise quite sharply but negative base effects left the inflation rate at a 16-month low.

Today's update suggests that the economy began the current quarter on a strong footing. However, manufacturing is struggling and looks likely to be a drag again and persistent weakness here must raise a question mark over the medium-term outlook. Today's update puts the French ECDI at 7 but the ECDI-P at minus 10. In other words, overall economic outperformance is wholly attributable to unexpectedly strong inflation.

Services, at 53.9 in March, accelerated noticeably while manufacturing remained under 50 at 47.3. April's expectations are 53.0 for services and 47.5 for manufacturing. The key composite output is expected at 52.8, up from March's final 52.7.

The flash Composite Purchasing Managers' Index (PMI) provides an early estimate of current private sector business activity by combining information obtained from surveys of around 1,000 manufacturing and service sector companies. The flash data are released around ten days ahead of the final report and are typically based upon around 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 data are 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' 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.