The S&P Global China manufacturing PMI survey's headline index increased slightly from 51.4 in April to 51.7 in May and has now indicated expansion in the sector for four consecutive months. Official PMI survey data published last week, in contrast, showed weaker conditions in May, indicating contraction in the sector after modest expansion previously.

Respondents to the S&P PMI survey reported output grew in May at the fastest pace in nearly two years, though new orders and new export orders were reported to have risen at a less pronounced pace. Payrolls were reported to have been cut for the ninth consecutive month but the survey's measure of business confidence rose. The survey shows slightly stronger growth in input costs and steady growth in selling prices.

Today's data were close to the consensus forecast of 51.6 for the headline index. The China RPI rose from minus 36 to minus 21 and the RPI-P rose from minus 50 to minus 30, indicating that data are coming in below market expectations.

After a slightly better-than-expected 51.4 in April, S&P's manufacturing PMI in May is expected to hold in plus-50 ground for a seventh straight month at 51.6.

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.