CN: PMI Manufacturing Index

Fri Sep 29 20:45:00 CDT 2017

Consensus Actual Previous
level 51.5 51.0 51.6

The Caixin Manufacturing PMI headline index for China fell from 51.6 in August to 51.0 in September, falling short of the consensus forecast of 51.5. This is the first decline in the index in four months.

Survey respondents reported output grew at a weaker pace in September while the survey's measures of new orders and new export orders also declined after reaching their highest level since 2014 and 2010 respectively in August. Confidence about the twelve-month outlook for output also weakened slightly from August. More postively, respondents reported further job shedding in September but at a slower pace than in August. Both input costs and selling prices were reported to have risen at a faster pace, the former rising by the most so far this year.

Today's survey contrasts with the official CFLP Manufacturing PMI - released earlier today - which showed an increase in the headline index from 51.7 in August to 52.4 in September. The Caixin Services PMI for September is scheduled for release early next week.

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.