What it means
ISM Manufacturing PMI (Purchasing Managers' Index) is a monthly survey of purchasing managers at US manufacturing firms, conducted by the Institute for Supply Management. Reports composite PMI score and sub-indexes (New Orders, Production, Employment, Supplier Deliveries, Inventories, Prices). Scale: 50 = no change, >50 = expansion, <50 = contraction. Released the first business day of each month at 10:00am ET. The composite reading and sub-indexes guide expectations for industrial production, GDP, and Fed policy.
Why it matters
ISM Manufacturing PMI is the most market-watched single survey because it's (a) released first in the monthly data cycle, (b) survey-based with quick turnaround, (c) leading indicator for hard manufacturing data. Sub-indexes reveal composition: hot New Orders + cool Production = inventory drawdown expected; rising Prices = inflation pressure. Used by Fed economists and Wall Street as a top forward indicator.
How to use it
Track the headline composite vs 50. Sustained readings below 47 typically precede recessions; readings above 55 indicate strong expansion. Watch New Orders (forward-looking) and Prices Paid (inflation pressure). Compare to Markit PMI (different methodology, alternative reading) for cross-check.
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