Manuscript in prep in PhD thesis
A Ph.D. dissertation would often be considered as a final report for the invented methodology and the proved accomplishments.

One of the most common acceptable and routine criteria to assess the denouements of a dissertation would be consideration of the published papers, are which constructed the dissertation's motif. If you present no sign of publication corresponding to your work, the assessment committee may not be convinced, considerably, about the validity of your work, because related peer-reviewed papers, consisting of the research, are expected to be analyzed in a careful way and authentication of dissertation's accomplishments could be, intrinsically and roughly, taken into acocunt with due attention to such papers.

As the Ph.D. studies are long, it is inevitable that one or two papers (corresponding to the last phases of the research) will not be published, up to the defense. So, one could assert that their referencing as "Submitted" would be ok.