PMI manufacturing ended December at 47.9, down 3 tenths from the mid-month flash and down 1.5 points from November. The result extends a year-long run near but mostly under breakeven 50, the level consistent with no change in month-to-month composite activity. The rival ISM manufacturing index, which will be posted tomorrow, has been running slightly below the PMI since late last year; today's 47.9 should confirm Econoday's consensus for the ISM which is currently at 47.2.

Worrying indications from the PMI are what the report describes as a"sharper fall" in new orders and a"steeper" decline in backlogs, both pointing to continued if not deepening weakness for composite activity in the months ahead. Respondents were, however, apparently short on specifics, citing"global economic uncertainty" for the trouble. Production for the sample declined in Decmeber as did employment. Inflation readings included an uptick in costs and related pass-through to customers.

The final manufacturing PMI for December is expected to come in at 48.2, unchanged from the mid-month flash and about a point lower than November's final 49.4.

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.