Official Chinese PMI survey data show little change in conditions in China's aggregate economy in February, with the data showing further contraction in the manufacturing sector and somewhat stronger growth in the non-manufacturing sector. Today's data suggest China's economy remains weighed down by weakness in the property market despite recent measures aimed at improving liquidity conditions.

The headline index for the CFLP manufacturing PMI fell from 49.2 in January to 49.1 in February, just below the consensus forecast of 49.3 and indicating contraction in the sector for the fifth consecutive month. The CFLP non-manufacturing PMI survey's headline index rose from 50.7 to 51.4, above the consensus forecast of 50.8. The composite index covering the entire economy was unchanged at 50.9 in February.

Today's data were mixed relative to consensus forecasts, with the China RPI falling from minus 21 to minus 36 and the RPI-P falling from minus 30 to minus 50, indicating that data are coming in well below market expectations.

The CFLP manufacturing PMI is expected to hold steady in February at 49.3 from January's 49.2 which was slightly less weak than expected and up marginally from December's 49.0. The non-manufacturing PMI, which in January was 50.7, is expected at 50.8.

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.