CN: CFLP Manufacturing PMI

Sun May 31 19:58:00 CDT 2015

Consensus Actual Previous
CFLP Mfg PMI 50.3 50.2 50.1

China's May CFLP manufacturing PMI remained virtually stable at 50.2, up from 50.1 in April. The reading offered some relief to investors but not enough to stave off worries about a persistent economic slowdown. Any level above 50 reflects growth. The sector last contracted in February.

Meanwhile China's services PMI reading for May was also over the point which separates growth in the sector from contraction with a reading of 53.2. It had been 53.4 in April.

Among the sub-indexes, production was up to 52.9 from 52.6 in April. Orders also improved to 50.6 from 50.2. Although export orders improved to 48.9 from 48.1, they still remained in contractionary territory. Imports also continued to contract along with input prices, raw materials inventories and inventories. Business expectations retreated for a second month, this time to 56.8 from 59.5 in April and 61.3 in March.

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.