The S&P China manufacturing PMI survey shows the sector contracted for the sixth consecutive month in January and at a similar pace to that seen in recent months, with the survey's headline index increasing to 49.2 from 49.0 in December. Respondents reported public health conditions continue to have significant impact on economic activity and sentiment with Covid-19 cases still high despite falling in recent weeks. Official PMI survey data published earlier in the week also showed conditions in the manufacturing sector stabilised but remained subdued in January.

Survey respondents reported output, new orders, and new export orders all fell in January, while payrolls were reported to have been cut for the tenth consecutive month. The survey's measure of business confidence, however, rose to to its highest level since April 2021, perhaps indicating that respondents expect a substantial improvement in public health conditions in coming months. Respondents reported margins tightened further in January with the survey's measure of input costs growing at the fastest pace in seven months but selling prices lowered for the ninth month in a row.

Caixin's manufacturing PMI has been in contraction for five months in a row and, at a consensus 49.8, is not quite expected to move into expansion in January.

The S&P 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 S&P 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.