The S&P Global China manufacturing PMI rose a notch from 51.7 in May to 51.8 in June and has now indicated a rising rate of growth in the sector for five consecutive months. This index has been above breakeven 50 since late last year and has been trending higher since late 2023; it is now at its highest level in just over three years. Official PMI survey data published on the weekend, in contrast, showed a second consecutive month of modest contraction in the sector in June.
 
Respondents to the S&P PMI survey reported output grew in June at the fastest pace in two years, though new orders and new export orders were reported to have risen at a less pronounced pace. Payrolls were reported to have stabilised in June after several months of contraction but the survey's measure of business confidence fell to its lowest level in more than two years. The survey also shows stronger price pressures, with its measure of input costs growth at a two-year high and selling costs reported to have been raised at the fastest paced in eight months.
 
Today's data were above the consensus forecast of 51.5. The China RPI and RPI-P were unchanged at minus 21 and minus 30 respectively, indicating that data are coming in below market expectations.

After 51.7 in May, S&P's manufacturing PMI in June is expected to hold in plus-50 ground for an eighth straight month.

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.