Official Chinese PMI survey data indicate that output across China's economy rose in February for the second consecutive month and at a faster pace, with the headline index increasing for both the manufacturing and non-manufacturing sectors. Authorities relaxed public health restrictions late last year and today's data suggest economic conditions have improved sharply in response.

The headline index for the CFLP manufacturing PMI rose from 50.1 in January to 52.6 in February, above the consensus forecast of 50.9 and the highest level since 2012. The CFLP non-manufacturing PMI survey's headline index rose from 54.4 to 56.3, well above the consensus forecast of 54.5 and reaching its highest level in almost two years. The composite index covering the entire economy, the General PMI, rose from 52.9 in January to 56.4 in February.

Today's data are one of the few official releases to report February data separately. Most official economic data for China are not reported separately for January and February but are instead combined and reported together in order to remove distortions caused by changes in the timing of lunar new year holidays each year. Official activity data for January and February combined are scheduled for publication mid-March.

After rising more than 3 points in January to 50.1, the CFLP manufacturing PMI is expected to rise further to 50.9 in February, while the non-manufacturing PMI, which surged nearly 13 points in January to 54.4, is expected to stabilize at 54.5. Covid effects have been making for wide swings in this report.

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.