CN: PMI Manufacturing Index

Wed Feb 28 19:45:00 CST 2018

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level 51.6 51.5

The Caixin Manufacturing PMI headline index for China increased from 51.5 in January to 51.6 in February. This index is at its highest level since August and has signalled modest but consistent expansion in the Chinese manufacturing sector for nine consecutive months.

Survey respondents reported stronger growth in new orders in February, party offset by slower growth in output and new export orders. The survey's employment measure indicated further job cuts in the sector, though reported confidence about the 12-month outlook picked up to its strongest level for nearly a year. Input costs were reported to have risen sharply but at a slightly slower pace in February, while the reported increase in selling prices was little changed.

The small increase in the Caixin manufacturing survey's headline index is contrasts with the official CFLP Manufacturing PMI - released earlier in the week - which showed a sharp drop in the headline index from 51.3 in January to 50.3 in February. The Caixin Services PMI for January 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.