The Caixin Manufacturing PMI headline index for China fell to 51.2 in March from 51.7 in February. The index has now been at or above the 50 level for nine consecutive months. Earlier in the week the official CFLP Manufacturing PMI showed a small increase in the headline index in March.
Survey respondents reported output, new orders and new export orders all grew in March but at a slower pace than they did in February. Despite this moderation in activity, respondents remain confident about the twelve-month outlook for output and reported only a small drop in payrolls in March.
Today's survey suggest that price pressures continue to build, but at a slightly slower pace for both input costs and selling prices.
The Caixin Manufacturing Purchasing Managers' Index (PMI) is based on monthly a questionnaire that surveys of over 500 companies which provide an advance indication of what is really happening in the private sector economy by tracking changes in variables such as output, new orders, stock levels, employment and prices across the manufacturing sectors.
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 Markit PMI 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.