The manufacturing PMI did indeed provide a leading indication of subsequent contraction for the ISM manufacturing index. The former ended January at 46.9, little changed from 46.8 in the mid-month flash. This index first edged below the breakeven 50-line with the October flash, followed later by the ISM which first edged below 50 in November followed by slightly greater contraction in December.

Today's final reading for the January PMI will firm expectations for slightly greater contraction in the ISM index, from December's 48.4 to perhaps 48.0 as indicated by Econoday's consensus. The ISM will be posted at 10:00 a.m. EST this morning.

New orders for the PMI sample are described by the report as having contracted"sharply" in January with output also falling and respondents trying to reduce inventories. And, in a surprise, price pressures, which have been moderating in many business surveys, reaccelerated in this survey, both for inputs and selling prices.

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.