The economy continued to outperform expectations in mid-quarter. At 53.3, the flash composite output index was 0.6 points stronger than the market consensus and up from January's final 52.9. This is its highest reading in nine months.

However, headline growth remains restricted to services where the flash sector PMI weighed in at 54.3, unchanged from January's final mark. By contrast, in manufacturing, the PMI provisionally printed at 47.1, up 0.1 point from the start of the year but still well in contraction territory.

Aggregate new orders increased for a third straight month, mainly due to a solid advance in services. Backlogs extended their trend decline but employment rose again, albeit only marginally, and business expectations for the year ahead improved for a fourth time in as many months, hitting their best level since February 2022.

Meantime, input costs rose at the fastest rate in half a year on the back of higher wages in services. Manufacturers also pointed to more expensive freight charges linked to disruptions to traffic in the Red Sea. Consequently, output prices chalked up their sharpest increase since July 2023.

Taken at face value, today's update suggests only limited pressure on the BoE to cut interest rates any time soon. The apparent buoyancy of costs and prices in the service sector will not go unnoticed at the bank and should all but guarantee that the MPC will vote for no change in Bank Rate again next month. More generally, the February report puts both the UK RPI and RPI-P at 23, showing overall economic activity running quite well ahead of forecasts.

Business activity is expected to expand again in February but at a slightly slower pace than at the start of the year. The key composite output index is put at 52.7 after January's final 52.9.

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.