Official Chinese PMI survey data show conditions in China's aggregate economy remained close to stagnant in September. The headline index for the CFLP manufacturing PMI rose from 49.1 to 49.8, above the consensus forecast of 49.5 but indicating contraction in the sector for the fifth consecutive month. The CFLP non-manufacturing PMI fell from 50.3 to 50.0, below the consensus forecast of 50.5 and indicating zero growth in the sector. The composite index covering the entire economy rose from 50.1 in August, its lowest level since December 2022, to 50.4 in September.

Today's data were above consensus forecasts, with the China RPI and RPI-P increasing from minus 64 to minus 36 and from minus 70 to minus 30 respectively, indicating that data are continuing to come in well below market expectations.

The CFLP manufacturing PMI is expected to rise in September to 49.5 after edging down to 49.1 in August. The non-manufacturing PMI, expected at 50.5 versus August's 50.3, has held above 50 for more than a year.

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.