The economy had a solid February although business activity was a little softer than originally reported. At 53.0, the final composite output index was 0.3 points weaker than its flash estimate but still well above the 50-expansion threshold. Indeed, this was its best reading since May 2023 and its fourth successive post above 50.

The modest headline revision was wholly attributable to services where the 54.3 sector PMI was trimmed to 53.8, now 0.5 points short of January's 8-month peak. Even so, new orders expanded by the most since May 2023 with gains reported in both the domestic and domestic markets. Employment was also up and while the increase was only relatively small, it was still the largest since July last year. Business expectations for the year ahead similarly strengthened with some 59 percent of respondents anticipating a rise in activity and only 9 percent a decline. This signalled the most upbeat optimism since February 2022.

However, higher wages and increased shipping charges saw input cost inflation climb to a 5-month peak while output price inflation hit its second-fastest rate since last July.

Accordingly, despite the negative headline revision, the final February data suggest only limited pressure on the BoE to cut interest rates any time soon. The apparent buoyancy of costs and prices will not go unnoticed by the MPC and should all but guarantee that the majority will vote for no change in Bank Rate later this month. Today's update leaves both the UK RPI and RPI-P in positive surprise territory at 21 and 17 respectively.

No revisions are expected leaving the composite output index at 53.3, up from January's final 52.9.

The Services Purchasing Managers' Index (PMI) provides an estimate of service sector business activity for the preceding month by using information obtained from a representative sector survey incorporating transport and communication, financial intermediation, business services, personal services, computing and IT and hotels and restaurants. 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 data are 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 non-manufacturing index in the U.S. and the 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 S&P Global PMI services data give a detailed look at the services sector, how busy it is and where things are headed. The indexes are widely used by businesses, governments and economic analysts in financial institutions to help better understand business conditions and guide corporate and investment strategy. In particular, central banks in many countries use the data to help make interest rate decisions. PMI surveys are the first indicators of economic conditions published each month and are therefore available well ahead of comparable data produced by government bodies.