The S&P Global China manufacturing PMI survey's headline index fell from 51.0 in August to 50.6 in September, indicating conditions in the sector remain subdued. Official PMI survey data published earlier in the week also showed only modest growth in the sector in September, though both surveys show conditions have improved since the middle of the year. Officials have implemented some loosening of policy settings in recent months, but PMI survey data suggests these measures have yet to deliver a substantial improvement in economic activity.

Respondents to the S&P PMI survey reported output rose at faster pace in September, but the survey shows new orders rose at a steady pace and another decline in new export orders. Payrolls were also reported to have been cut after an increase previously, while the survey's measure of business confidence fell to its lowest level in twelve months. Price pressures were reported to have strengthened in September with the survey showing input costs rose at the fastest pace since January and the first increase in selling prices in seven months.

Today's data were below the consensus forecast of 51.1 for the headline index. The China RPI fell from plus 36 to plus 7 and the RPI-P fell from plus 30 to zero, indicating that recent Chinese data in sum are coming in near the consensus forecasts.

After edging into the plus 50 expansion zone in August at 51.0, S&P's manufacturing PMI in September is expected to edge marginally higher to 51.1.

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.