The S&P Global China manufacturing PMI survey's headline index fell from 50.5 in June to 49.2 in July, indicating renewed contraction in the sector after modest expansion in the two previous months. This is in line with offical PMI survey data published earlier in the week that also showed the sector contracted in July.

Today's data are also broadly in line with the assessment of senior Chinese leadership, reported last week, that China's economic recovery is"wave-like" and"tortuous" and continues to face"difficulties and challenges", including insufficient domestic demand and a"severe" external environment. Despite their concerns about the pace of recovery, the report indicated that officials do not currently envisage a need for a major shift in policy settings.

Respondents to the S&P survey reported output and new orders fell in July after previous increases, while new export orders were reported to have fallen at the fastest pace in nearly a year. Payrolls were reported to have been cut for the fifth consecutive month, while the survey's measure of business confidence indicates sentiment remains positive but subdued. Price pressures were reported to have remained weak in July with the survey showing input costs and selling prices fell for the fourth and fifth month in a row respectively.

Today's data was below the consensus forecast of 50.1 for the headline index. The China ECDI fell from 5 to minus 2 and the ECDI-P fell from 14 to minus 2, very close to the zeroline to indicate that recent Chinese data in sum are coming in near the consensus forecasts.

Having shown virtually no growth over the past year, Caixin's manufacturing PMI in July is expected to slow to an even flatter 50.1 from 50.5 in June.

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.