UK manufacturing was slightly less weak than suggested by the provisional data. At 43.0, the final sector PMI was 0.5 points higher than its flash estimate but still some 2.3 points short of its final July mark and, more importantly, well below the 50-expansion threshold. Indeed, the latest reading was a 39-month low and means that, in line with the rest of Europe, UK manufacturing is firmly in the doldrums.

The ongoing decline in new orders accelerated, reflecting increasing weakness in both the domestic and overseas markets. In turn, output decreased for a sixth straight month and at one of the steepest rates in the survey's history. Backlogs followed suit and headcount was trimmed for an eleventh successive month. Even so, manufacturers maintained a positive view of the year ahead with optimism climbing to its highest level in four months.

With average vendor lead times shortening for a seventh consecutive month, input costs fell again and by the most since January 2016. However, although factory gate prices also decreased, the reduction here was only marginal.

Apart from diminishing cost pressures and surprisingly firm business optimism, there is little in this report to suggest that manufacturing will be recovering any time soon. That said, recent PMI surveys have been overly pessimistic about sector conditions, and this may well be the case again in August. Nonetheless, in general, the weakness of demand suggests that companies will be struggling at least through year-end. Today's update leaves both the UK ECDI (minus 38) and ECDI-P (minus 36) far enough below zero to indicate overall economic activity falling quite well short of market expectations. However, whether this will prove enough to accommodate a pause in BoE tightening this month remains to be seen. The August CPI report, released just a day ahead of the MPC meeting, will be key.

No revision is expected to the flash data leaving the headline index at 42.5, down from July's final 45.3.

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.