CN: PMI Manufacturing Index

Tue Oct 31 20:45:00 CDT 2017

Actual Previous
level 51.0 51.0

The Caixin Manufacturing PMI headline index for China was unchanged at 51.0 in October. This index has now signalled expansion in the Chinese manufacturing sector for five consecutive months after indicating a small contraction in May.

Survey respondents reported output grew at the slowest pace in four months in October, as well as further job losses and weaker confidence about the twelve-month outlook. This was partly offset by a small pick-up in the survey's measures of new orders and new export orders. Both input costs and selling prices were reported to haver increased at a slightly slower but still relatively strong pace in October.

The stability in the Caixin manufacturing survey's headline index contrasts with the official CFLP Manufacturing PMI - released earlier in the week - which showed an decline in the headline index from 52.4 in September to 51.6 in October. The Caixin Services PMI for October 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.