Private sector business activity proved firmer than expected in November. At 50.1, the flash composite output index was more than a full point stronger than the market consensus, up from October's final 48.7 and (just) back above the 50-expansion threshold for the first time since July.

The overall improvement reflected a return to positive growth in services and a less weak manufacturing sector. In the former, the flash PMI rose from October's final 49.5 to 50.5, a 4-month high, and in the latter increased from 44.8 to 46.7, a 6-month peak.

Manufacturing output (47.9 after 44.3) fell again but by the least in 5 months and aggregate new orders also posted its smallest drop since July. Both domestic and overseas demand slid further and backlogs were down sharply. However, total employment was broadly steady as an increase in services offset a decrease in manufacturing. Business sentiment about the coming year was positive and well above October's 10-month low.

Meantime, inflation news was more robust. The average input cost rate rose only slightly versus the previous period's 33-month low but faster wage growth helped to boost output price inflation to a 4-month high.

In sum, the November results are clearly on the strong side of expectations but with demand still falling, recession risks have not gone away. That said, inflationary pressures in services will remain an issue for at least some BoE MPC members and next month's probable vote for no change in Bank Rate should again be split. Today's report boosts the UK's RPI and RPI-P but at minus 16 and minus 10 respectively, both measures show overall economic activity still running slightly cooler than forecast.

Services, at 49.5 in October, held in sub-50 contraction for the third straight month and, at a consensus 49.6, are not expected to emerge in November. Manufacturing, which has been in sub-50 contraction for 15 months in a row, is seen at 45.0 versus the prior month's 44.8. The composite is expected to remain little changed, at 48.8 versus October's 48.7.

The flash Composite Purchasing Managers’ Index (PMI) provides an early estimate of current private sector business activity by combining information obtained from surveys of the manufacturing and service sectors of the economy, around 650 companies in each case. The flash data are released around ten days ahead of the final report and are typically based upon around 75-85 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 survey is 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' surveys, investors will know what the economic backdrop is for the various markets. The flash PMIs are particularly closely watched as they provide a wide ranging look at economic developments and some of the most up to date information available. 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.