CN: CFLP Manufacturing PMI

Sat Jan 31 19:00:00 CST 2015

Consensus Actual Previous
CFLP Mfg PMI 50.2 49.8 50.1

The CFLP manufacturing PMI contracted in January with a reading of 49.8, down from a barely expansionary 50.1 reading in December. All subcategories with the exception of finished goods inventories and supplier delivery times were lower in January.

Although production expanded, it grew at a slower pace with a reading of 51.7, down from 52.2 the month before. Readings here have been weakening each month since September. New orders also expanded but at a weaker pace.

Most other subcategories including new export orders, imports, input prices, raw materials inventories and employment contracted. All were below their December readings. Business expectations sank to 47.4 from 48.7 the month before for a second month of contraction.

A survey of about 800 purchasing managers about the health of the manufacturing sector. The numeric result is a diffusion index. A reading above 50 indicates that manufacturing is growing. A reading below 50 indicates contraction.

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 CLFP 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 survey tends to have a greater impact when it is released prior to the HSBC/Markit manufacturing PMI because the two reports are correlated.