Industrial production was much stronger than expected in February. A 1.1 percent monthly rise was more than a full percentage point above the market consensus and the best performance since last June. January's drop was steepened marginally from 0.2 percent to 0.3 percent but annual growth climbed from 0.3 percent to 1.4 percent, an 8-month high.

Manufacturing fared even better, posting a 1.2 percent advance versus January when it fell 0.2 percent. This raised yearly growth by 1.2 percentage points to a respectable 2.7 percent. Fully 11 of the 13 subsectors posted monthly gains with transport equipment (3.7 percent) especially robust.

Elsewhere, overall production was boosted by gains in electricity and gas (0.5 percent) and water supply (1.9 percent) but dented by a fall in mining and quarrying (0.8 percent).

February's sharp rebound leaves overall goods production very well paced to provide a lift to first quarter GDP growth. Absent any revisions, March would need at least a 3.1 percent decline to prevent a positive contribution. As such, the sector would appear to have turned the corner, providing further reason for the BoE to be wary about cutting Bank Rate too soon. Today's updates raise the UK RPI to 1 and the RPI-P to 10, indicating that while overall economic activity is evolving much as expected, the real economy is slightly outperforming.

Industrial production is expected to be flat in February after slipping 0.2 percent in January following solid gains in the prior two months. Manufacturing output is expected to rise 0.2 percent.

Industrial production measures the physical output of the mining and quarrying, manufacturing, gas and electric, and water supply and sewerage sectors. Manufacturing is seen as the best guide to underlying developments as the other subsectors can be highly volatile on a short-term basis. Estimates are largely based on a monthly business survey of roughly 6,000 companies.

Industrial and manufacturing outputs are watched carefully by market participants despite the decline in the importance of manufacturing in the UK economy. Manufacturing output is the preferred number rather than industrial production which can be unduly influenced by electrical generation and weather. The manufacturing index is widely used as a short-term economic indicator in its own right by both the Bank of England and the UK government. Market analysts also focus on manufacturing and its sub-sectors to get insight on industry performance.

Industrial production accounts for less than 16 percent of the economy within which the key manufacturing sector is worth about ten percentage points. Total manufacturing is divided into thirteen sub-sectors, ranging from food, drink and tobacco through chemicals and chemical products to electronics and transport equipment. Consequently, this report has a big influence on market behavior. In any given month, one can see whether capital goods or consumer goods are growing more rapidly. Are manufacturers still producing construction supplies and other materials? This detailed report shows which sectors of the economy are growing and which are not.

Investors want to keep their finger on the pulse of the economy because it usually dictates how various types of investments will perform. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers more subdued growth that won't lead to inflationary pressures. By tracking economic data such as industrial production, investors will know what the economic backdrop is for these markets and their portfolios.