| Consensus | Consensus Range | Actual | Previous | |
| Composite Index | 49.9 | 49.6 to 50.5 | 50.6 | 50.5 |
| Manufacturing Index | 50.1 | 49.8 to 50.3 | 50.3 | 50.0 |
| Non-Manufacturing Index | 49.9 | 49.9 to 50.7 | 50.2 | 50.1 |
Highlights
Official Chinese purchasing managers' index (PMI) survey data indicate factory activity in China contracted for the third straight month in June as the world's second-largest economy struggles to recover from the impact of the pandemic in the face of slower global demand. The non-manufacturing sector stayed just above the neutral line for the second month in a row, reflecting sluggish consumer spending.
The index for the CFLP manufacturing PMI rose to 50.3 in June after falling to 50.0 in May from 50.3 in April. The CFLP non-manufacturing PMI ticked up to an above-consensus 50.2 after rising to 50.1 in May from 49.4 the previous month.
The composite index covering the entire economy continued advanced further to 50.6 from 50.5, also beating expectations.
A reading above 50 indicates an expansion in activity while a reading below it indicates a contraction.
Market Consensus Before Announcement
Economic activity expected to continue hovering around the breakeven 50 index reading in June, indicating no growth and no contraction. The composite index is expected at 49.9, down from 50.1 in May. Manufacturing seen at 50.1 in June versus 50.0 in May and non-manufacturing expected down at 49.9 versus 50.5 in May.
Definition
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.
Description
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.