Private sector business activity expanded in April at its fastest rate since May 2022, although the final PMI data indicate a slightly softer rate than originally reported. Hence, at 54.1, the final composite output index was 0.3 points short of its flash estimate and so now only 0.4 points stronger than its final mark in March.

The downward headline revision came courtesy of services where the 56.6 flash sector PMI was trimmed to 56.2. That said, this was still 1.2 points above its final March print and points to a robust period for business activity. The improvement here was largely due to strength in new orders and backlogs, both of which recorded healthy gains. In turn, businesses added aggressively to headcount, which expanded by the most since May 2022. Even so, business confidence about the year ahead eased to a three-month low.

Inflation pressures remained elevated but rates for both input costs and output charges continued to decline. Of note, the latest rise in selling prices was the weakest in 14 months.

In terms of national composite output indices, the best performing country was Spain (56.3) which was just ahead of Italy (55.3). Germany (54.2), Ireland (53.5) and France (52.4) were also all above the 50-expansion threshold.

The final April results should be consistent with a pickup in Eurozone GDP growth this quarter, following a disappointingly sluggish 0.1 percent rate at the start of the year. That said, the PMIs overestimated the strength of the first quarter and so may be overly optimistic about the current period too. Today's update puts the region's ECDI at minus 14 and the ECDI-P at minus 5. In general, economic activity is beginning to fall marginally behind market expectations, but this will not stop the ECB hiking interest rates again later today.

No revisions are expected to the flash data leaving the composite output index at 54.4, up from March's final 53.7.

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.