The Institute for Supply Management, a trade group of purchasing executives, is expected to report Wednesday that its index of manufacturing business activity increased to 50.9 in December, up from 50.8 in November, according to the consensus estimate of Wall Street economists surveyed by Thomson Financial/IFR. However, economists' latest estimates ranged from 50 to 51.9.

The report -- which covers such indicators as new orders, production, employment, inventories, delivery times, prices, export orders, and import orders -- will be issued at 10:00 a.m. EST. A reading above 50 indicates expansion, while a reading below 50 indicates contraction.

In November, manufacturing grew due to the continuing strength in new orders and production, although prices, driven by higher energy prices, are a major concern, the ISM said. October's 50.9 reading, which was down from a reading of 52 in September, was the weakest since March.

Economists at consulting firm Global Insight said in a release that the manufacturing sector overall is "barely keeping its head above water" although there are major differences among industries. For example, computers, farm equipment, energy and aircraft are outperforming motor vehicles, building materials, heavy trucks and construction machinery.

"This mix does not look destined to change for the foreseeable future, although the inevitable intensification of the housing recession could pull the overall index below the 50 level for a period in early 2008," the release said.