ISM Services PMI

The release

How it is measured.

The method is that of the manufacturing survey. The headline is the equal-weighted average of four diffusion indices: business activity, new orders, employment and supplier deliveries. A reading above 50 means more respondents reported an increase than a decrease.

Why markets watch it.

It covers the larger part of the economy and follows the manufacturing survey by a few days. Its prices index is read for inflation in services, which tends to change more slowly than the price of goods, and its employment index ahead of the official jobs report.

How it is commonly misread.

The supplier deliveries index is inverted: slower deliveries raise it, because in ordinary times they are a sign of strong demand. When deliveries slow because supply is disrupted, the headline rises for a reason that is not good news. Older commentary calls the survey “non-manufacturing”, which was its name before it was changed.

An explanation of why the release is followed, not a view on what any market will do when it is published. Educational information, not investment advice or a recommendation to trade.