The final PMI data confirmed another decline in business activity in January. At 47.0, the final headline index was down to 0.3 points versus its flash estimate and now only 0.8 points stronger than its December's print. This made for an 18th straight month below the 50-expansion threshold.

The decline in output extended to 11 months with January's rate matching that seen in December. The fall again reflected ongoing weakness in new orders with both domestic and overseas demand still on a downward trend. Falling backlogs offered some support for production but employment was trimmed further. Even so, business sentiment about the year ahead remained positive and even moved up to 4-month high.

Meantime, problems in the Red Sea lay behind the first deterioration in vendor performance in a year and by the most since November 2022. Disruptions here contributed to a rise in overall input costs which in turn ensured a fresh increase in factory gate prices.

In line with the rest of Europe, UK manufacturing made a poor start to the year and weak demand and rising cost pressures warn of more bad news to come. The January data could have been a lot worse but the BoE will be watching closely the effects of military action on domestic prices. The updated January data reduce the UK RPI to minus 14 and the RPI-P to minus 25. Both measures show overall economic activity falling somewhat short of market expectations but this will not be enough to trigger a cut in Bank Rate later today.

No revisions are expected to the flash data leaving the sector PMI at 47.3, up from December's final 46.2.

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.