When is the ISM PMI released?

The manufacturing survey comes out on the month's opening business day, with the services survey two business days later, and each describes the previous month. Holidays and weekends shift the exact date, so check the release schedule on ISM's site or an economic calendar.

What is the difference between the manufacturing and services PMI?

They survey different parts of the economy with the same method. The manufacturing index asks purchasing managers at factories, and the services index asks those at firms in areas such as retail, finance, health care and transport. The two can move in opposite directions in the same month.

Does a PMI below 50 mean a recession?

A reading under 50 means more surveyed firms in that sector reported contraction than growth that month. A recession is judged from much broader data over a longer stretch. One weak reading is a warning worth tracking, and a run of them across both surveys carries more weight.

PMI: Reading the Purchasing Managers' Index and Its 50 Line

The Institute for Supply Management puts out its manufacturing report on the first business day of each month and its services report on the third. That puts both among the first readings on a new month, ahead of most government figures on spending, output or prices for the same period, and that head start is the main reason traders pay attention.

How a diffusion index works

ISM asks purchasing and supply executives a simple question about each part of their business: higher, the same, or lower than last month? The answers become a diffusion index. The share reporting “higher” is added to half the share reporting “same.” Nobody reports a dollar amount.

The published figures are seasonally adjusted, so a real release won’t always match the raw sum. A reading of 50 means the “higher” and “lower” answers cancel out. Above 50, more respondents saw growth. Below 50, more saw contraction.

Level and direction are separate readings

A PMI of 48 says contraction on balance. A move from 46 to 48 says the contraction is getting less widespread. Both are true at once. Markets often react to the change and to the gap from forecasts, so a sub-50 print that improves and beats expectations can land as good news, even though the sector is still shrinking by this measure.

It counts firms, and ignores magnitude

The index counts how many respondents saw an increase and how many saw a decrease. It says nothing about how large those changes were. A month where a few firms saw huge jumps in orders and everyone else saw small declines could print below 50, while a month of tiny, widespread gains could print well above it. So a PMI is best read as a signal of how broad a change is across firms, and it can disagree for a month or two with hard data on factory output or sales, which measure the actual size of the move and arrive weeks later, by which point the market has usually already reacted to the survey.

The components

Each report breaks out sub-indexes built the same way. The ones people quote most:

New orders. Often watched as a hint of future activity.
Production (called business activity in the services report).
Employment.
Prices. Read as an early sign of cost pressure.
Supplier deliveries and inventories.

The headline manufacturing PMI is a composite of several of these. Prices is published alongside it and does not feed the headline, which is why a report can show a weak headline and a hot prices index at the same time. That combination gets attention from anyone watching inflation, since the inflation measures covered in the CPI and PCE comparison arrive later in the month.

What people get wrong

Reading 50 as a growth rate. A 52 does not mean 2% growth.
Treating manufacturing as the whole economy. Services covers a much larger share of activity, and the two reports can point in different directions.
Mixing up surveys. Two PMIs for the same month can differ because they sample different firms.
Overreading one month. Survey data is noisy, and a single print is a data point in a trend.

That last one applies across economic data. The same caution runs through why one jobs report is a first draft.

Where you’ll see it

On an economic calendar, the PMI appears as a row with the prior reading, the consensus forecast and the actual figure once it’s out. The release itself, on ISM’s site, has the headline, each sub-index with its change from the prior month, and a note on whether each is growing or contracting and how many months in a row. Bond yields may move on a surprise, and those moves are quoted in basis points. More economic releases are collected under the economy topic.

Diffusion index is the general method. Consensus forecast is the expected reading the actual is compared with. Hard data, such as industrial production or retail sales, measures the size of activity and usually arrives later.