The eurozone composite PMI edged up to 51.0, 0.1 points below the consensus and its highest point in a year, but still signalling only modest growth. The picture, however, was uneven. Manufacturing emerged as the bright spot, recording its most substantial production increase in over three years, while services lost momentum, with activity barely above stagnation at 50.5.

New orders rose for the first time since May 2024, fuelling the fastest pace of employment growth in over a year. Yet, the external environment continues to drag, with export orders falling at their quickest rate since March, stretching the run of weak international demand to three and a half years.

Inflation pressures, which had eased earlier, are returning. Rising wage and input costs, particularly within services, pushed firms to accelerate price increases, the sharpest in four months. Business confidence, meanwhile, held steady but muted; optimism for the year ahead exists, though it remains below historical norms.

In effect, the eurozone is progressing slowly. Domestic resilience underpins progress, while weak exports and higher prices temper the pace, leaving the RPI at 8 and the RPI-P at minus 3. This means that economic activities continue to stay within the expectations of the eurozone economy.

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.