The S&P Global China manufacturing PMI survey's headline index rose from 49.2 in July to 51.0 in August, indicating a return to modest expansion in the sector. Official PMI survey data published earlier in the week showed the sector contracted at a less pronounced pace in August. Today's data are broadly in line with the recent assessment of senior Chinese leadership that China's economic recovery is"wave-like" and"tortuous" and continues to face"difficulties and challenges".

Respondents to the S&P PMI survey reported output and new orders rose in August after declining in July, while new export orders were reported to have fallen at a less pronounced pace. Payrolls were reported to have been increased after five consecutive months of cuts and at the fastest pace since 2010, but the survey's measure of business confidence fell to its lowest level in eleven months. Price pressures were reported to have been mixed in August with the survey showing input costs rose for the first time since February but another decline in selling prices.

Today's data were above the consensus forecast of 49.3 for the headline index. The China ECDI rose from minus 43 to minus 14 and the ECDI-P rose from minus 60 to minus 20, closer to the zeroline to indicate that recent Chinese data in sum are coming in nearer to the consensus forecasts.

Having shown virtually no growth over the past year, S&P's manufacturing PMI in August is expected to hold steady at 49.3 versus 49.2 in July which was nearly a full point below expectations.

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.