CN: CFLP Manufacturing PMI

Thu Mar 31 20:00:00 CDT 2016

Consensus Actual Previous
CFLP Mfg PMI 49.4 50.2 49.0

China's manufacturing sector climbed back into expansionary territory. The March reading was 50.2, up from 49 in February. Expectations were for a reading of 49.4. Any reading above 50 signals expansion something Chinese manufacturers surveyed have not reported for eight months. For services the PMI was 53.8, compared to 52.7 in February. The services sector traditionally does a little better.

Among the subindexes, production climbed to 52.3 from 50.2. New orders jumped to 51.4 from 48.6 while new export orders climbed into expansion territory with a reading of 50.2 after 47.4 in February.

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.