At a final 47.9 in August, the manufacturing PMI did improve by nearly a point from the mid-month flash but remains more than a point below July's 49.0. The result will perhaps move expectations a little higher for the ISM index at the top of the hour where Econoday's consensus is calling for a marginal gain to a still depressed 46.8.

All these readings are below the 50-breakeven threshold and continue to point to a sector struggling to tread water. New orders in the PMI sample fell more sharply in August than they did in July which is this report's most substantial weakness. This sample's output contracted in the month as backlogs are becoming depleted. Employment is down as are expectations for future output.

Price news is mostly negative: input costs continue to rise but are below the long-term aveage while pass through to customers, though historically modest, also rose in the month.

The final manufacturing PMI for August is expected to come in at 47.0, unchanged from the mid-month flash to indicate sizable contraction in activity.

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.