what is the ism manufacturing index 
the ism manufacturing index also known as the purchasing managers index pmi is a monthly indicator of u s economic activity based on a survey of purchasing managers at manufacturing firms nationwide it is considered to be a key indicator of the state of the u s economy formally called the manufacturing ism report on business the survey is conducted by the institute for supply management ism understanding the ism manufacturing indexthe ism manufacturing index or pmi measures the change in production levels across the u s economy from month to month the report is released on the first business day of each month thus it is one of the earliest indicators of economic activity that investors and business people get regularly the ism manufacturing index is a composite index that gives equal weight to new orders production employment supplier deliveries and inventories each factor is seasonally adjusted 1the ism report on business contains three separate purchasing managers indexes based on surveys in addition to the manufacturing pmi the ism produces a services pmi for the non manufacturing sector which is released on the third business day of the month a hospital s pmi is released on the fifth business day of the month the institute also releases a semi annual economic forecast in may and december 2uses of the ism manufacturing indexby monitoring the ism manufacturing index investors can better understand national economic trends and conditions when the index is rising investors anticipate a bullish stock market in reaction to higher corporate profits the opposite is the case in the bond markets which may fall as the ism manufacturing index rises because of the sensitivity of bonds to inflation the monthly announcement of the ism manufacturing index can greatly influence investor and business confidence this is because the index is a survey of purchasing managers and supply management executives who are at the forefront of their companies supply chains purchasing managers are in the best position to assess the ebb and flow of business conditions the manufacturers they work for must respond quickly to changes in demand ramping up or scaling back purchases of materials they use in anticipation of demand for their finished products an index of more than 50 indicates an expansion in the manufacturing segment of the economy in comparison with the previous month while a reading of 50 indicates no change and a reading below 50 suggests a contraction of the manufacturing sector 1index constructionthe ism survey is broadly diversified across industries based on the north american industry classification system naics which is weighted by each industry s share of u s gross domestic product gdp survey responses are delineated into 18 industry sectors such as chemical products computer and electronic products and transportation equipment survey respondents are asked whether activities in their organizations are increasing decreasing or stagnant the activities include new orders production employment supplier deliveries inventories customers inventories commodity prices order backlog new export orders and imports for each of the categories a diffusion index is calculated by adding the percentage of respondents reporting an increase to half of the percentage of respondents reporting no change the composite manufacturing index is calculated by taking an equal 20 weighting for five categories of questions on new orders production employment supplier deliveries and inventories 1the pmi has been calculated and published monthly since 1948 by the ism a not for profit professional association ism manufacturing index readingat the beginning of june 2024 the ism released the series index information for may 2024 the monthly report compared series data from april 2024 index information from the report is below 1the first three columns from the report indicate the most recent findings from the survey as well as the month over month change in each index the report also signals the rate of change in addition to longer term trends how long each index has been moving in any given direction in terms of months in may the manufacturing sector in the u s contracted for the second consecutive month after the contraction seen in april 2024 before april march witnessed an expansion which ended a 16 month streak of contractions 1