CN: CFLP Manufacturing PMI

Thu Apr 30 20:00:00 CDT 2015

Consensus Actual Previous
CFLP Mfg PMI 50.0 50.1 50.1

April CFLP manufacturing PMI inched up to a reading of 50.1 -- barely over the 50-point level that separates growth from contraction. The result was better than expectations, with economists predicting that the reading would be a breakeven 50. The March reading was also 50.1.

Four of ten sectors recorded readings over the 50 breakeven level. They were production (52.6), new orders (50.2), supplier delivery times (50.4) and business expectations (59.5). However, new export orders, finished goods inventories, imports, input prices, raw materials inventories and employment continued to contract.

China's economy, which has enjoyed some of the fastest growth rates in the world in the past two decades, is now slowing and policymakers recently said it will target economic growth of "around 7 percent" this year, the slowest expansion in a quarter century.

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.