The S&P Global China manufacturing PMI showed another month of stagnant conditions in the sector in December, with the headline index increasing to just 50.1 from 49.9 in November. Official PMI survey published today also showed ongoing weakness in the sector in December.

Respondents to the S&P PMI survey reported output and new orders were weak, while new export orders fell for the second time in three months. Payrolls were reported to have fallen for the second consecutive month while the survey's measure of business confidence moderated but remained positive. The survey also shows input costs rose at a faster pace while selling prices fell for the fourth consecutive 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.