Manufacturing activity contracted in May albeit at a slightly slower pace than originally thought. The 46.9 flash sector PMI was revised up to 47.1, now 0.7 points below its final reading in April and far enough beneath the 50-expansion threshold to signal at least a modest recession. The latest outturn was its weakest in four months.

All of the PMI components signalled a fresh deterioration. Output declined for a third consecutive month and the rate of contraction in new orders was the steepest since January as both the domestic and overseas markets recorded fresh losses. Job losses were reported for an eighth successive month reflecting redundancies and the non-replacement of leavers. However, businesses remained positive about the outlook with some 57 percent of respondents expecting production to be higher in 12 months' time and only 7 percent anticipating a fall.

Inflation news was mixed. Input costs saw a modest decline, but factory gate prices continued to rise. That said, output price inflation was the weakest in two-and-a-half years.

In sum, the revised May data still make for pretty miserable reading. In particular, declining demand suggests that near-term conditions will remain very challenging. Still, falling input costs will be welcome and the fact that businesses remain optimistic provides hope for the more medium-term. In fact, at 28 and 11 respectively, the UK's ECDI and ECDI-P show that economic activity in general is actually running a little hotter than market expectations.

No revision is expected to the 46.9 flash print.

The Manufacturing Purchasing Managers' Index (PMI) provides an estimate of manufacturing business activity for the preceding month by using information obtained from a representative sector survey incorporating around 3,000 companies. 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 survey covers more than 600 industrial companies and is 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 manufacturing index in the U.S. and the and 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 PMI manufacturing data give a detailed look at the manufacturing sector, how busy it is and where things are headed. Since the manufacturing sector is a major source of cyclical variability in the economy, this report has a big influence on the markets. And its sub-indexes provide a picture of orders, output, employment and prices.