At 50.2 the final PMI composite index for January signalled a slight expansion of business activity. The latest print is unchanged from the flash estimate and marks a 5-month high.

At the national level, the best-performing countries were Spain (54.0) and Germany (50.5) both of which saw an expansion of business activities. The weaker performing countries were Italy (49.7), and France (47.6), all of which were short of the 50-growth threshold. Surprisingly Germany managed an 8-month high, while Spain recorded a 2-month low.

The final services PMI for January was 51.3, 0.1 points below the flash estimate and 0.3 points below December's final mark. Still, this signalled an expansion. Demand improved slightly in January as new orders rose for the second month in a row. Employment growth also quickened compared to December. Input cost increased at the quickest pace in 9 months, however selling price inflation held steady. Although weaker than December last year, business optimism remained mostly positive for the following 12 months.

The final January data put the Eurozone RPI at 2 and the RPI-P at 3 meaning that overall economic activity is generally within market forecasts.

The composite is expected unchanged at 50.2 and services unchanged at 51.4.

The Composite Purchasing Managers' Index (PMI) provides an estimate of private sector output for the preceding month by combining information obtained from surveys of the manufacturing and service sectors of the economy. Results are synthesised into a single index which can range between zero and 100. A reading above (below) 50 signals rising (falling) output versus the previous month and the closer to 100 (zero) the faster is output growing (contracting). The report also contains the final estimate of the services PMI. The data are provided by S&P Global using 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.