Private sector business activity has essentially stagnated this month. At 49.9, the flash composite output index was just 0.1 point below the 50-expansion threshold to record its highest level in nine months. The latest reading was up from February's final 49.2 and 0.3 points above the market consensus.

The headline improvement was wholly attributable to services where the flash sector PMI rose from February's final 50.2 to 51.1, also a 9-month peak. However, conditions in manufacturing deteriorated with the flash PMI falling from an already weak 46.5 to 45.7, a 3-month low.

Aggregate new orders declined by the least in ten months and backlogs fell at the slowest rate in nine months. Employment was up for a third straight month although only modestly due to a steeper decline in manufacturing. Meantime, despite the ongoing disruptions to traffic in the Red Sea, supplier delivery times shortened for a second successive month indicating a further reduction in supply chain pressures.

Looking ahead, business expectations for the coming year improved for a sixth straight month and indicated the highest degree of optimism since February 2023. Confidence in services reached a 23-month peak. Input cost inflation eased to a 3-month low and output price inflation cooled for the first time in five months having hit a 9-month high in February.

Overall, the March results are consistent with a gradual turnaround in the Eurozone economy. However, momentum in general remains soft and the manufacturing sector is still in the doldrums. That said, the ECB should be pleased with fresh signs that inflation pressures are easing. Today's report leaves the region's RPI at minus 4 and the RPI-P at 5, both readings showing overall economic activity broadly matching market expectations.

The composite is expected to rise to 49.6 in March versus 49.2 in February. Manufacturing is expected at 47.0 versus February's lower-than-expected 46.5 with services expected at 50.5 from February's higher-than-expected 50.2.

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. 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, produced by S&P Global uses a representative sample of around 5,000 manufacturing and services companies, the former including Germany, France, Italy, Spain, the Netherlands, Austria, the Republic of Ireland and Greece and the latter Germany, France, Italy, Spain and the Republic of Ireland.

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.