CN: PMI Flash Mfg Index

Thu Jan 22 19:45:00 CST 2015

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Level 49.8 49.5

Manufacturing continues to contract, but at a slower rate. This was another sign that the economy is adjusting to a "new normal" of slower growth. China's flash manufacturing reading climbed to 49.8 from 49.6 in December. Both output and new orders changed direction to increase from decrease the month before. New export orders increased but at a slower rate. Employment, output and input prices and stocks of purchases however, decreased at a faster rate.

The flash Purchasing Managers' Manufacturing Index (PMIs) is based on monthly questionnaire surveys of selected companies which provide an advance indication of what is really happening in the private sector economy by tracking changes in variables such as output, new orders, stock levels, employment and prices across the manufacturing sectors. The flash estimate is released about 10 days prior to the final PMI, which is posted usually on the first of the month.

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.

The Markit PMI manufacturing data give a detailed look at the manufacturing sector, how busy it is and where things are headed. Since the manufacturing sector is a major source of cyclical variability in the economy, this report has a big influence on the markets. And its sub-indexes provide a picture of orders, output, employment and prices. The flash estimate gives investors an advanced look at what to expect on the first of the month.