Official Chinese PMI survey data show weaker conditions in China's aggregate economy in January. The headline index for the CFLP manufacturing PMI fell from 50.1 in December to 49.1 in January, indicating renewed contraction in the sector after three months of weak growth. The CFLP non-manufacturing PMI fell from 52.2 to 50.2, indicating the sector is close to stagnation. The composite index covering the entire economy fell from 52.2 in December to 50.1 in January.

The headline index for the manufacturing and non-manufacturing PMIs were below the consensus forecasts of 50.1 and 52.1 respectively. The RPI fell from plus 56 to plus 28 while the RPI-P fell from plus 69 to plus 29, indicating that data are still coming in above market expectations.

Business activity is treading water with the manufacturing PMI expected to be flat at 50.1 from a month earlier. Services PMI is expected to edge down to 52.1 from 52.2.

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.