ISM Report on Business Shows Manufacturing Economic Status

The Institute for Supply Management’s (ISM) Report on Business usually moves the markets — or, in other words, is a market mover. The ISM measures the health of the manufacturing sector in the U.S. This report is based on the input of purchasing managers surveyed across the U.S. and is compiled by the ISM.

The Report on Business is different from the regional purchasing manager’s reports, although some regional reports, such as the Chicago-area report, often serve as good predictors of the national data. The regional reports are not used as a basis for the national report.

The report addresses 11 categories, including the widely watched headline, the Purchasing Managers’ Index, or PMI.

Here’s how to look at the ISM report:

  • A number above 50 on the PMI means that the economy is growing.

  • You want to find out whether the main index and the subsectors are above or below 50.

  • Just as important is whether the pace of growth is slowing or picking up speed. The report clearly states whether each individual sector is growing or not growing, and whether it is doing so because its pace is slowing or picking up speed.

  • The data for the entire report is included with a summary of the economy’s current state and pace near the headline of the report.