ISM Manufacturing Index: A concise guide What it is The ISM Manufacturing Index — commonly called the Manufacturing PMI (Purchasing Managers’ Index) — is a monthly survey-based indicator of U.S. manufacturing activity compiled by the Institute for Supply Management (ISM). It summarizes responses from purchasing and supply managers across manufacturing industries and is a widely followed gauge of economic conditions. How it works
* Survey respondents report whether key activities (new orders, production, employment, supplier deliveries, inventories, etc.) are increasing, decreasing, or unchanged versus the prior month.
* For each activity, ISM calculates a diffusion index: percent reporting increases + (0.5 × percent reporting no change).
* The headline Manufacturing PMI is a composite that equally weights five components: new orders, production, employment, supplier deliveries, and inventories (each 20%).
How to read the PMI
* Above 50 = expansion in manufacturing compared with the prior month.
* 50 = no change.
* Below 50 = contraction.
* The PMI is reported as an index number (not a percent change in output).
Why it matters
* Timing: The ISM Manufacturing Report on Business is released early in the month, making it one of the first regular indicators of current economic trends.
* Market impact: Strong PMI readings often support equity markets (expectations of higher profits) and can weigh on bond prices if they imply rising inflation risk. Weak readings can signal slowing growth and affect investor and business sentiment.
* Forward insight: Because purchasing managers are directly involved with ordering and inventories, their responses provide near-term insight into demand, production plans, and hiring intentions.
Structure and coverage
* Responses are drawn from a broad set of manufacturing industries (categorized by NAICS) and are weighted by each sector’s share of U.S. economic activity.
* The report separates data into industry sectors and includes additional series such as order backlog, new export orders, customers’ inventories, and commodity prices.
* ISM has published PMI data monthly since 1948.
Limitations
* The PMI reflects month-over-month changes and is a diffusion measure, not a direct measure of production volumes or dollar values.
* Being survey-based, it captures respondents’ perceptions and expectations, which can be influenced by short-term noise.
* Manufacturing represents only part of the economy; services and other sectors can move differently.
Release schedule
* The Manufacturing ISM Report on Business is released on the first business day of each month at 10:00 a.m. Eastern Time.
* ISM’s Services (non-manufacturing) report is released on the third business day of the month.
Bottom line The ISM Manufacturing PMI is a compact, timely indicator of manufacturing conditions and a useful leading signal for broader economic trends. Investors, business leaders, and policymakers monitor its headline number and subcomponents to assess demand, production momentum, hiring, and supply-chain pressures. Explore More Resources