CN: CFLP Manufacturing PMI

Sat Feb 28 21:00:00 CST 2015

Actual Previous
CFLP Mfg PMI 49.9 49.8

The CFLP manufacturing PMI indicated that China's weakness continued into 2015. February CFLP manufacturing PMI improved for the first time in seven months despite the Chinese New Year holiday but remained just below the 50 mark indicating contraction for a second straight month. The production index slipped to 51.4 from 51.7 the month before as many firms closed for the Lunar New Year holiday week.

New orders and new export orders improved to 50.4 and 48.5 respectively from January's 50.2 and 48.4. Imports rose to 47.5 in February from January's 46.4. The input price index improved for the first time in six months, rising to 43.9 in February from January's 41.9, possibly reflecting the rise in global crude prices last month.

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.