The flash PMI data proved slightly stronger than expected but still suggest economic activity remained very sluggish this month. At 47.4, the composite output index was up from February's final 46.3 and 0.6 points above the market consensus. However, while a 3-month high, it was still well short of the 50-expansion threshold.

In line with recent months, weakness was largely restricted to manufacturing where the flash sector PMI fell from February's already weak final 42.5 to just 41.6, deep in recession territory and a 5-month low. By contrast, its service sector counterpart rose from 48.3 to 49.8, essentially signalling stagnation.

Aggregate new orders fell again but by the least since last June due to a reduced drag from overseas demand. Backlogs similarly decreased further as did overall employment despite a modest increase in services. Nonetheless, business expectations about the year ahead improved for a sixth straight month to reach their highest level since April last year. That said, they remained short of their long-run average.

Meantime, input cost inflation decelerated for the first time in five months, driven by a smaller increase in services despite ongoing rises in wages. Output price inflation also declined to register its weakest print in four months. The rate here now stands close to its long-run average.

While the headline index is stronger than expected, today's report still paints a fairly gloomy picture of the German economy in general and of the manufacturing sector in particular. First quarter GDP growth looks all the more likely to be negative. Still, the March data put the German RPI at exactly 0 and the RPI-P at 13 - real economic activity may be weak but it is no weaker than expected.

Manufacturing sank into even deeper contraction in February, falling to 42.5 from January's 45.5. Small improvement to 43.5 is expected for March. Services, which improved in February to 48.3, are seen at 48.8. Consensus for March's composite is 46.8 following February's 46.3.

The flash Composite Purchasing Managers' Index (PMI) provides an early estimate of current private sector business activity by combining information obtained from surveys of around 1,000 manufacturing and service sector companies. The flash data are released around ten days ahead of the final report and are typically based upon around 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 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.