CN: PMI Manufacturing Index

Thu May 31 20:45:00 CDT 2018

Actual Previous
level 51.1 51.1

The Caixin Manufacturing PMI headline index for China was unchanged at 51.1 in May, indicating that conditions in the sector are steady but still weaker than they were around the turn of the year.

Survey respondents reported modestly stronger growth in output and new orders in May as well as a smaller drop in new export orders. Respondents were also more confident about the twelve month outlook. The impact of these small moves on the headline index was offset by a drop in the survey's measure of employment which indicated a slightly sharper fall in payrolls. The surveys measure of input cost growth increased to a three-month high in May, with respondents also reporting they hiked selling prices at the fastest pace so far this year.

Stability in the Caixin manufacturing survey's headline index contrasts with the official CFLP Manufacturing PMI - released earlier in the week - which showed a solid increase in the headline index from 51.4 in April to 51.9 in May. The Caixin Services PMI for April is scheduled for release l 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.