In contrast to the notable weakness reported by the regional surveys so far this month, January's manufacturing PMI actually rose sharply, up 2.4 points to a 50.3 level that exceeds Econoday's consensus by 2.6 points. This is the best reading since October 2022.

The services PMI likewise outperformed, rising 1.6 points to a 52.9 for its best reading since June last year. This is 1.9 points better than Econoday's consensus.

The manufacturing sample reported a broad-based gain in new orders at the fastest rate since May 2022. Output was likewise solid, rising at the best pace since June 2023. In an interesting note, the sample cited the risk of shortages tied to"challenging trucking conditions" according to the report as well as other undefined"transportation delays" that could be referring to troubles in the Red Sea.

How the manufacturing results will affect forecasts for the ISM report will be interesting to watch. This report would point to a gain from the ISM's 47.4 December score, in line perhaps with the Philadelphia Fed (slightly less contraction) but not the Richmond Fed (slightly more contraction) and especially the Empire State report (much deeper contraction). For services, where the PMI sample reported the best order rate in seven months, today's data clearly signal acceleration for the ISM's index which sat at 50.6 in December.

January's price data were mixed for the PMI samples with uneven indications of cooling cost pressures and likewise uneven indications of pass through to customers. For the Federal Reserve, indications such as today's point to general strength and to still high prices, a mix that won't be pulling forward the bank's first rate cut. Also not pulling forward a rate cut is the Relative Performance Index, holding at a very solid 38 to indicate that recent US economic data on net are handily beating Econoday's consensus forecasts.

January's consensus for manufacturing is little change at 47.7 versus 47.9 in December; for services, the consensus is 51.0 versus 51.4.

The flash Composite Purchasing Managers' Index (PMI) provides an early estimate of current private sector output by combining information obtained from surveys of around 1,000 manufacturing and service sector companies. The flash data are released around 10 days ahead of the final report and are typically based upon around 85 percent of the full survey sample. The report tracks changes in variables such as new orders, stock levels, employment and prices across both manufacturing and services. Production is also tracked, defined as"production" for manufacturing and"output" for services. Results are synthesized into a single index which can range between zero and 100. A reading above (below) 50 signals rising (falling) output versus the previous month and the closer to 100 (zero) the faster output is growing (contracting). The report also contains flash estimates of the manufacturing and services PMIs. The data are produced by S&P Global.

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.