Private sector business activity expanded further this month but at a slower rate than in April. The flash composite output index weighed in at 51.4, down from April's final 52.4 and nearly a full point short of the market consensus. The latest reading was also a 4-month low.

The headline decline was attributable to services where growth decelerated quite sharply. The flash sector PMI dropped from April's final 54.6 to 52.8, also a 4-month trough. By contrast, its manufacturing counterpart rose from 45.6 to 46.1, still deep in recession territory but well above April's 35-month low. The fall in manufacturing output (45.1 after 42.2) was similarly less marked.

Aggregate new orders contracted for the first time since February with losses reported in both the domestic and overseas markets and purchasing activity was also weaker. Employment continued to advance and by the most in almost a year but business confidence deteriorated to a 5-month low.

Meantime, input cost inflation eased to its weakest mark in 23 months but efforts to protect margins saw output prices rise at a somewhat faster pace than in April.

Today's update points to a notable loss of economic momentum in mid-quarter. Quarterly growth should still be positive but is now all less likely to impress. To this end, the French ECDI stands at minus 4 and the ECDI-P at minus 25. Economic activity in general is falling behind market expectations.

Services, at 54.6 in April, continued to accelerate above 50 while, by contrast, manufacturing remained under 50 at 45.6. May's expectations are slowing for services to 52.0 and little change for manufacturing at 46.0.

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.