Official Chinese PMI survey data indicate that growth in China's aggregate economy remains subdued after picking up early in the year, with the data showing ongoing contraction in the manufacturing sector and weaker expansion in the non-manufacturing sector. 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".

The headline index for the CFLP manufacturing PMI rose from 49.3 in July to 49.7 in August, above the consensus forecast of 49.1 but indicating contraction in the sector for the fifth consecutive month. The CFLP non-manufacturing PMI survey's headline index indicates further but more modest expansion, dropping from 51.5 in July to 51.0 in August, matching the consensus forecast. The composite index covering the entire economy rose modestly from 51.1 in July, its lowest level since last December, to 51.3 in August.

Today's data modestly outperformed expectations. The China ECDI rose from minus 71 to minus 43 and the ECDI-P rose from minus 100 to minus 60, indicating that data remain below market expectations.

The CFLP manufacturing PMI is expected to deteriorate slightly to 49.1 in August from July's 49.3 while the non-manufacturing PMI, which in July held flat at 51.5, is expected to slow slightly to 51.0.

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.