A final 46.2 for December's manufacturing PMI is consistent with sharp contraction in month-over-month activity and will confirm expectations for a 48.0 reading in tomorrow's closely watched ISM manufacturing report for December, an index that had held up better than the PMI but moved into contraction to 49.0 in November.

A comparison of the two indexes (both composites of underlying components) hints at a modestly leading role for the PMI, that is this index, at 47.6 in November, has been accurately signaling change in the ISM. Today's report is underscoring weakness in customer demand, both domestic and foreign, and slowing growth in employment as backlogs are worked off.

In a positive for Federal Reserve policy makers, price pressures in this report, whether costs for raw materials or selling prices of finished goods, both slowed to multi-year lows. Watch for the ISM manufacturing index at 10:00 a.m. EST on tomorrow's calendar.

The final manufacturing PMI for December is expected to come in unchanged from the mid-month report at 46.2, a reading indicating tangible contraction.

Based on monthly questionnaire surveys of selected companies, the Purchasing Managers' Manufacturing Index (PMI) offers an advance indication on month-to-month activity in the private sector economy by tracking changes in variables such as production, new orders, stock levels, employment and prices across manufacturing industries. The final index for the current month is released roughly a week after the flash.

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 ISM manufacturing index in the U.S. and the Markit PMIs in the U.S. and elsewhere, 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 Markit 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.

Markit originally began collecting monthly Purchasing Managers' Index (PMI) data in the U.S. in April 2004, initially from a panel of manufacturers in the U.S. electronics goods producing sector. In May 2007, Markit's U.S. PMI research was extended out to cover producers of metal goods. In October 2009, Markit's U.S. Manufacturing PMI survey panel was extended further to cover all areas of U.S. manufacturing activity. Back data for Markit's U.S. Manufacturing PMI between May 2007 and September 2009 are an aggregation of data collected from producers of electronic goods and metal goods producers, while data from October 2009 are based on data collected from a panel representing the entire U.S. manufacturing economy. Markit's total U.S. Manufacturing PMI survey panel comprises over 600 companies.