Manufacturing activity contracted in June albeit at a slightly slower pace than originally thought. The 46.2 flash sector PMI was revised up to 46.5, now 0.6 points below its final reading in May and far enough beneath the 50-expansion threshold to signal at least a modest recession. The latest outturn was its weakest in six months.

All of the PMI components showed a fresh deterioration. Output contracted for a fourth consecutive month though at a slower pace, with downturns in investment and intermediate goods declining further in contrast to mild growth in consumer goods. New orders fell for the third month in a row in the steepest rate of contraction since January as both domestic and overseas markets recorded fresh losses, with the latter deteriorating at the fastest pace so far this year. Job losses were reported for a ninth successive month, reflecting weaker demand, redundancies and cost management initiatives. Businesses remained positive about the outlook but at the lowest rate in six months, with only 53 percent of respondents expecting production to be higher in 12 months.

On the inflation front, input costs declined for the second month in a row to the greatest extent since February 2016, while factory gate prices fell for the first time since April 2016.

The weakening demand highlighted in today's data suggests near-term conditions will remain very challenging. Still, falling input costs are welcome and the fact that more than half of businesses remain optimistic provides hope for the more medium-term. At 20 and 7 respectively, the UK's ECDI and ECDI-P show that economic activity in general is actually running a slightly hotter than market expectations.

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.