The S&P Global China manufacturing PMI survey's headline index increased slightly from 50.9 in February to 51.1 in March and has now indicated expansion in the sector for four consecutive months. Official PMI survey data published over the weekend also showed improved conditions, indicating expansion in the sector for the first time in six months.

Respondents to the S&P PMI survey reported output grew in March at the fastest pace since May 2023, with new orders and new export orders also reported to have risen at a faster pace. Payrolls, however, were reported to have been cut for the seventh consecutive month, with respondents citing a focus on efforts to cut costs. The survey's measure of business confidence rose for a third consecutive month to its highest level since April 2023. Price pressures were reported to have moderated further in March with the survey showing the first decline in input costs since July 2023 and a reduction in selling prices for the third month in a row.

Today's data were close to the consensus forecast of 51.0 for the headline index. The China RPI fell from plus 79 to plus 71 and the RPI-P fell from plus 100 to plus 90, indicating that data are still coming in well above market expectations.

After an as-expected 50.9 in February, S&P's manufacturing PMI is expected to edge a tenth higher in March to 51.0. This PMI has held above breakeven 50 for the past for four months, in contrast to the official CFLP manufacturing PMI which has been in long contraction.

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.