The S&P Global China manufacturing PMI survey's headline index was unchanged at 50.8 in January, indicating modest growth in the sector for the third consecutive month. Official PMI survey data published earlier in the week, however, showed further contraction in the sector in January, suggesting that China's economy remains impacted by weakness in the property market.

Respondents to the S&P PMI survey reported steady growth in output, slightly weaker growth in new orders, and the first increase in export orders since June 2023. Payrolls were reported to have been cut for the fifth consecutive month but at a less pronounced rate, while the survey's measure of business confidence rose to a nine-month high. Price pressures were reported to have moderated further in January with the survey showing the slowest increase in input costs in five months and a reduction in selling prices after a previous increase.

Today's data were just below the consensus forecast of 50.9 for the headline index. The China RPI and RPI-P both fell to minus 14 from minus 7 and minus 8 respectively, indicating that recent Chinese data in sum are coming in moderately below consensus forecasts.

After a steady and marginally positive 50.8 in December, which nevertheless was a half point better than expected, S&P's manufacturing PMI is expected to hold little changed in January at 50.9.

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.