Private sector business activity was revised just marginally weaker in June. The 47.3 flash composite output index was trimmed a notch to 47.2 and so now stands fully four points below its final reading in May. This was its first sub-50 reading since January and indicative of a moderate contraction.

The headline decline was attributable to worsening conditions in services where the final sector PMI weighed in at 48.0, unchanged from its flash estimate but some 4.5 points short of the 52.5 posted at the start of the quarter.

As shown in the preliminary report, services were hit by an accelerated decline in new business, mainly reflecting the impact of higher interest rates and inflation. Both the domestic and overseas markets deteriorated. Backlogs were broadly flat while job creation remained positive, albeit at a three-month low. Confidence towards the year ahead remained optimistic but still declined to its lowest level in more than two-and-a-half years.

Significantly though, cost pressures eased markedly, and the rate of input price inflation eased to a 22-month low. Similarly, output charges, while still rising, saw their rate drop to an 18-month trough.

Today's update suggests that the economy ended the second quarter on a soft note, although the hard data available to date still suggest that GDP growth will be positive. The French ECDI (4) and ECDI-P (also 4) indicate that overall economic activity is broadly matching market expectations.

The Composite Purchasing Managers' Index (PMI) provides an estimate of private sector output for the preceding month by combining information obtained from surveys of around 750 manufacturing and service sector companies. 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.

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.