CN: CFLP Manufacturing PMI

Wed May 30 20:00:00 CDT 2018

Consensus Actual Previous
CFLP Mfg PMI 51.4 51.9 51.4

China's CFLP Manufacturing PMI headline index advanced from 51.4 in April to 51.9 in May, above the consensus forecast of 51.4 and moving to its highest level since September 2017.

The increase in the headline index in May reflects gain in most components. The survey's measure of production rose from 53.1 in March to to 54.1 in April, while the new orders index rose from 52.9 to 53.8 and the new export orders index rose from 50.7 to 51.2. The survey's measure of employment continues to indicate job losses in the sector but at a slightly slower pace than in April, with survey respondents also reporting an increase in input costs growth and stronger confidence about the outlook.

Also released today, the CFLP Non-Manufacturing PMI headline index rose from 54.8 in April to 54.9 in May, its highest level since January. The Caixin Manufacturing and Services PMI surveys for May will be released in coming days.

China Federation of Logistics and Purchasing (CFLP) Manufacturing Purchasing Managers Index (PMI) is the monthly survey of about 800 purchasing managers that is conducted jointly by CFLP and National Bureau of Statistics (NBS). The questions focus on the health of the manufacturing sector. The numeric result is a diffusion index. A reading above 50 indicates that manufacturing is growing. A reading below 50 indicates contraction.

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 CLFP 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. The survey tends to have a greater impact when it is released prior to the HSBC/Markit manufacturing PMI because the two reports are correlated.