Overall business activity continued to outperform expectations in mid-quarter. At 53.4, the flash composite output index was 0.5 points stronger than the market consensus and up 0.6 points versus its final print in July. The latest outturn was also a 4-month high.

The latest headline gain reflected further rises in both manufacturing and services. For the former, the sector PMI weighed in at 52.5, up from July's final 52.1 and a 26-month peak. Its services counterpart climbed from 52.5 to 53.3, its best print since April.

Within manufacturing, the output sub-index (54.2 after 54.9) declined but remained well above the 50-expansion mark and aggregate new orders again increased at a robust pace on the back of a solid rise in domestic demand. Backlogs fell but this in large part was due to strong job creation as employment expanded by the most in 14 months. Business confidence was down slightly versus July but remained upbeat in both sectors.

Meantime, input cost inflation fell to its lowest rate in just over three-and-a-half years despite service providers noting still elevated wage pressures. Output prices rose robustly but by the least since the start of 2021.

In sum, the August results suggest that the economy is sustaining decent momentum this quarter, in turn easing pressure on the BoE MPC to cut Bank Rate again next month. Another split vote now looks all the more likely. Today's update puts both the UK RPI and RPI-P at minus 9, meaning that overall economic activity is falling just slightly short of market forecasts.

Manufacturing has held over the 50 line the last three reports with August seen unchanged at 52.1. Services rose 4 tenths in July to 52.5 with August's consensus at 52.8. The composite is seen little changed at 52.9 vs 52.8.

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, around 650 companies in each case. 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 is 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' surveys, investors will know what the economic backdrop is for the various markets. The flash PMIs are particularly closely watched as they provide a wide ranging look at economic developments and some of the most up to date information available. 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.