The S&P China manufacturing PMI survey shows conditions in the sector remained above the neutral level in June but the survey's headline index slipped to 50.5 after rising to 50.9 in May from 49.5 in April. It was slightly above the consensus forecast of 50.1.

Production growth slowed notably from May's 11-month high while new order growth remained mild overall. At the same time, firms recorded a further improvement in supplier performance and input costs declined solidly. Cost savings were generally passed on to clients, as firms looked to boost their competitiveness.

Optimism about the 12-month outlook for production waned to an eight-month low in June as some firms expressed concerns over relatively sluggish market conditions. Manufacturers cut their staffing levels for the fourth straight month due to weaker-than-expected sales and efforts to readjust capacity.

Official PMI survey data published earlier showed factory activity in China contracted for the third straight month in June as the world's second-largest economy struggles to recover from the impact of the pandemic in the face of slower global demand. The headline index of the previously released CFLP manufacturing PMI edged up to 49.0 in June after slipping to a five-month low of 48.8 in May from 49.2 in April.

Caixin's manufacturing PMI in June is expected to slow to a nearly dead flat 50.1 from 50.9 in May.

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.