The ISM reports explained: manufacturing and services PMIs and the 50 line
What ISM and PMI stand for, who answers the survey, when the manufacturing and services reports come out, why 50 matters and what the prices index says.
Government reports take weeks to collect. The ISM reports are faster: at the start of every month, they ask the people who buy supplies for thousands of businesses a simple question, is business better, the same or worse than last month? The answers come out as one number, and 50 is the line between growing and shrinking.
What ISM and PMI stand for
ISM is the Institute for Supply Management, a private, nonprofit association of purchasing and supply managers founded in 1915. It isn't a government agency. Its monthly Report On Business produces two PMIs (Purchasing Managers' Indexes): one for manufacturing and one for services.
When they come out
| Report | When | Time (New York) |
|---|---|---|
| ISM Manufacturing PMI | The first business day of the month | 10:00 a.m. |
| ISM Services PMI | The third business day of the month | 10:00 a.m. |
Both cover the month that just ended, which makes them some of the first data on any month.
How the 50 line works
Each manager says whether things like new orders or hiring went up, stayed the same or went down. ISM turns the answers into a diffusion index: the share saying “better” plus half of those saying “the same.”
- Above 50: more businesses are growing than shrinking.
- Below 50: more are shrinking than growing.
- The distance from 50 matters: 55 is strong growth; 45 is a clear contraction.
Manufacturing is a smaller part of the U.S. economy, but it turns first. Services is most of the economy, so it shows where the bulk of activity is going.
What is inside each report
- Manufacturing PMI: the average of five parts: new orders, production, employment, supplier deliveries and inventories.
- Services PMI: the average of four parts: business activity, new orders, employment and supplier deliveries.
- New orders: future business. Traders often watch it as the forward-looking part.
- Prices: whether businesses are paying more for what they buy. It's not part of the headline, but a jump can raise inflation worries and move bonds.
- Employment: an early hint at the jobs report a few days later.
You may also see PMIs from S&P Global. They're a different survey with the same idea; the Market Matrix calendar lists ISM.
Every market it moves
This report doesn't only move futures. Here is what usually happens across markets in the first minutes and hours, compared with what economists expected. The ticker symbols in parentheses are the futures contracts traders use for each market.
| Market | Above expectations | Below expectations |
|---|---|---|
| Stock indexes: S&P 500, Nasdaq 100, Dow, Russell 2000 (ES, NQ, YM, RTY) | Usually rise, led by industrial and small-cap stocks, unless the prices index jumps and raises inflation worries | Usually fall, especially if it slips further below 50 |
| Industrial and materials stocks: Caterpillar, Deere, steel and chemical makers | Usually rise | Usually fall |
| Treasury bonds (ZT, ZN, ZB) | Prices fall and yields rise | Prices rise and yields fall |
| U.S. dollar and currencies (DXY; EUR/USD, USD/JPY, USD/MXN; 6E, 6J) | The dollar usually rises | The dollar usually falls |
| Crude oil and copper (CL, HG) | Usually rise: busy factories use more energy and metals | Usually fall |
| Gold (GC) | Usually falls | Usually rises |
These are the usual first reactions, not rules. When the market fears a slowdown more than inflation, good news can become bad news for stocks, and the other way around. Watch how prices actually react before acting on the number. The dollar, oil and gold and bonds and yields explained go deeper into how these markets connect.
What it means for futures traders
- A 10:00 a.m. release, 30 minutes after the stock market opens, so the move lands during regular trading.
- Crossing 50 gets attention: a move from just above to just below 50 can make headlines and move markets more than the size of the change suggests.
- Watch the prices part when the market is worried about inflation; it can matter more than the headline.
How to handle it
The first and third business days of each month are ISM days. If you trade the open, be careful around 10:00 a.m. What moves the markets shows how growth surveys fit with inflation and rates. Market Matrix lists both ISM reports on the Market events calendar with alerts you can set.
This article is for education only and isn't financial advice. Trading futures involves substantial risk of loss. Release dates and times come from the agencies that publish the data and can change.