The manufacturing PMI, falling 1.6 points and in contraction at a sub-50 score of 48.0, confirms negative August readings for both the Empire State and Philadelphia Fed manufacturing indexes. Having suffered from Hurricane Beryl in July, the US manufacturing sector appears not to be rebounding so far this month.

The services PMI by contrast edged 2 tenths higher to a very favorable 55.2 to extend a now 16-month run of plus-50 scores and two straight months in the mid-50s. Demand for services is described as strong and sentiment is upbeat. But an important negative for the sample is a drop in employment, a reading that will capture the attention of forecasters amid uncertainty over the outlook for the August employment report.

Details for manufacturing include a sizable 2.7 point decline for output to a 14-month low at 47.8 with new orders dropping at the sharpest rate of the year. Export orders are at a full year low. Sentiment in this sector is described as"gloomy".

August's consensus for manufacturing is a steady reading of 49.5 versus July's 49.6. Services held steady in July at 55.0 with the consensus for August a point lower at 54.0. The composite is also seen a point lower, at 53.3.

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.