ISM Manufacturing Index

Wall Street Journal  May 2  Comment 
A closely watched gauge of U.S. factory activity slipped in April but continued to signal growth in the manufacturing sector, which has been battered by low oil prices and a strong dollar.
MarketWatch  Apr 1  Comment 
The Institute for Supply Management’s manufacturing index rose to 51.8% in March, the first reading above the key 50% threshold in six months.
Wall Street Journal  Apr 1  Comment 
U.S. factory activity expanded in March for the first time since last summer, a sign the nation’s economy is slowly shaking off the effects of a strong dollar and depressed oil prices.
The Hindu Business Line  Mar 2  Comment 
US ISM manufacturing index extends rebound
MarketWatch  Mar 1  Comment 
ISM manufacturing index rises in February
Wall Street Journal  Feb 29  Comment 
The ISM Manufacturing Index will likely be weak again, but it won’t be bad enough to induce an economic recession.
MarketWatch  Feb 1  Comment 
Stock market investors should be very worried that the ISM Manufacturing Index has remained in contraction territory, because history suggests a much bigger selloff and a recession may be looming.
SeekingAlpha  Feb 1  Comment 


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The ISM manufacturing index (or PMI - Purchasing Manager's Index before September 2001) is an economic measure for the US business sector. This index is run by the Institute of Supply Management in Arizona, which releases a monthly report on the first working day of the month on the overall state of the business sector in the United States.

The report attempts to gauge how the manufacturing sector of the US economy is doing. For example, it will cover how Ford is doing. This is similar to how the ISM Services Index works. Specifically, it is based on five main indicators:

  1. Production levels
  2. New orders placed
  3. Inventory Levels
  4. Supplier deliveries
  5. Employment environment

The Institute of Supply Chain Management sends out surveys every month to these businesses to answer a few simple questions. The survey isn’t just sent out to anyone, but directed towards the people who have the power to buy stuff and hire people. If you aggregate enough of this information you should be able to get a pretty good gauge of the manufacturing sector’s health.

Generally, an ISM value of 50 is considered neutral, a value of over 50 points as an expansion of the manufacturing sector and a value of less than 50 points a decline in industrial production views. The index has an average lead before the actual industrial production three to six months.


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