CN: CFLP Composite PMI

Official Chinese PMI survey data show improved conditions in China's aggregate economy in March. The headline index for the CFLP manufacturing rose from 50.2 in February to 50.5 in March, indicating modest expansion in the sector for the second consecutive month, while the non-manufacturing PMI also rose from 50.4 to 50.8. The composite index covering the entire economy rose from 51.1 in February to 51.4 in March.

The headline index for the manufacturing and non-manufacturing PMIs were just above the consensus forecasts of 50.3 and 50.6 respectively. The RPI and RPI-P rose from plus 50 and plus 90 to plus 57 and plus 100 respectively. indicating that data are still coming in well above market expectations.

Manufacturing is expected to edge up to 50.3 in March from 50.2 in February and services is seen at 50.6 versus 50.4 in February.

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.