The UK economy was stronger than originally thought in April. The 53.9 flash composite output index was revised up a full point and, at 54.9, was some 2.7 points stronger than its final reading in March and indicative of what should be a solid month for private sector business activity.

The surprisingly large headline revision in part was attributable to a more buoyant services sector, where the 54.9 flash PMI was also boosted by a point to 55.9, its highest reading in 12 months. New orders saw their steepest increase in 13 months, with both domestic and overseas markets posting fresh gains. Exports have now expanded for five consecutive months. Consequently, businesses continued to add to headcount, which saw its sharpest gain since September 2022. Indeed, growth here would have been more marked but for the ongoing lack of slack in the labour market. Nonetheless, businesses remained optimistic about the year ahead and sentiment extended its recent run of gains to reach its highest level since March 2022.

However, labour shortages were reflected in the first increase in input cost inflation since last November as wages were hiked to attract and retain staff. In turn, output price inflation also accelerated from the 19-month low seen in March.

In sum, today's update further reduces the likelihood of a UK recession this year and should equate with positive growth this quarter. To be sure, with both the UK ECDI and ECDI-P now at a heady 46, the economy in general is easily outperforming market expectations. To this end, the April findings must increase the chances of another hike in Bank Rate at the BoE MPC meeting next week.

No revisions are expected to the flash data leaving the composite output index at 53.9, up from March's final 52.2 and the services PMI at 54.9, up from 52.9.

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.