CN: CFLP Manufacturing PMI

Wed Nov 30 19:00:00 CST 2016

Consensus Actual Previous
CFLP Mfg PMI 51.0 51.7 51.2

China's CFLP manufacturing PMI headline index rose from 51.2 in October to 51.7 in November, stronger than the consensus forecast for a small fall to 51.0. The headline index has now been above 50.0, indicating stronger activity in the manufacturing sector, for four consecutive months, with November's increase taking the index to its highest level since mid-2014.

This increase in the headline index reflected a strong increase in the production index, up from 53.3 in October to 53.9 in November. The new orders index also rose from 52.8 to 53.9, while the new export orders index rose from 49.2 to 50.2. The survey's employment index indicates that Chinese manufacturers continued to shed jobs in October, but at a slower pace than in previous months, with the index increasing from 48.8 to 49.2. Survey respondents also reported a sharp increase in input prices, with the index rising from 62.6 to 68.3.

The CFLP services PMI, also released today, has also recorded a strong increase in its headline index, up from 54.0 in October to 54.7 in November, its highest level since mid-2014. The Caixin manufacturing PMI for November will be released shortly.

China Federation of Logistics and Purchasing (CFLP) Manufacturing Purchasing Managers Index (PMI) is the monthly survey of about 800 purchasing managers that is conducted jointly by CFLP and National Bureau of Statistics (NBS). The questions focus on 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.