ISM Manufacturing (Report On Business) in United States

The ISM Manufacturing PMI (Manufacturing Report On Business) is a composite diffusion index based on a survey of US industrial purchasing managers. A reading above 50 signals expanding activity and below 50 contraction. It includes sub-indices for New Orders, Production, Employment, Supplier Deliveries, Inventories and Prices.

A monthly survey of more than 300 purchasing managers. Each question is summarised as a diffusion index = (% 'better' responses) + 0.5 x (% 'same'). The composite PMI weights five sub-indices: New Orders, Production, Employment, Supplier Deliveries and Inventories.

It is one of the most closely watched leading indicators of the US economy, foreshadowing industrial production and GDP. The Prices sub-index is an early signal of goods inflation, so the Federal Reserve and the dollar and rates markets react strongly to surprises.

It is a qualitative survey capturing the direction of change, not its magnitude, and can diverge from the hard production data. A separate manufacturing PMI (S&P Global) with different methodology and values exists and should not be confused with the ISM's.