CN: PMI Manufacturing Index

Sun Apr 01 20:45:00 CDT 2018

Actual Previous
level 51.0 51.6

The Caixin Manufacturing PMI headline index for China fell from 51.6 in February to 51.0 in March. This in the index's lowest level since November and indicates only modest expansion in the Chinese manufacturing sector.

Survey respondents reported weaker growth in both output and new orders in March, with new orders also recording only a small increase. The survey's employment measure also showed jobs in the sector were cut in March at the fastest pace since August. Despite this weakness, however, the survey's measure of business confidence about the 12-month outlook picked up to a one-year high. Input costs were reported to have risen at the slowest pace in nine months in March, while selling prices were reported to have been raised only modestly.

The drop in the Caixin manufacturing survey's headline index contrasts with the official CFLP Manufacturing PMI - released over the weekend - which showed an increase in the headline index from 50.3 in February to 51.5 in March. The Caixin Services PMI for January is scheduled for release later in the 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.