Tangible if only limited monthly expansion for manufacturers is the headline from February's PMI flashes for the US. The manufacturing PMI rose 0.8 points to 51.5, still near the breakeven 50 but nevertheless the best reading since September 2022. The result will help lift forecasts for the ISM manufacturing index which in January rose 1.7 points to 49.1 for its best reading since October 2022. Manufacturing details include a 21-month high in new orders, a 10-month high in output, and quicker delivery times.

February's services PMI, however, slowed by 1.2 points to 51.3 which will hold down forecasts for the ISM services index which rose 2.8 points in January to 53.4. Services details include slowing in new orders, contraction in backlogs, and slowing in employment growth. Aggregate details for both services and manufacturing include easing cost pressures yet an uptick in selling prices.

February's consensus for manufacturing is 50.1 versus 50.7 in January; for services, the consensus is 52.0 versus 52.5.

The flash Composite Purchasing Managers' Index (PMI) provides an early estimate of current private sector output by combining information obtained from surveys of around 1,000 manufacturing and service sector companies. The flash data are released around 10 days ahead of the final report and are typically based upon around 85 percent of the full survey sample. The report tracks changes in variables such as new orders, stock levels, employment and prices across both manufacturing and services. Production is also tracked, defined as"production" for manufacturing and"output" for services. Results are synthesized 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 output is growing (contracting). The report also contains flash estimates of the manufacturing and services PMIs. The data are 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' 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.