ISM Index (Institute of Supply Management's index, former NAPM - National Association of Purchasing Managers) is the index of business activity.
ISM figures above 50 are usually considered as an indicator of expansion, while values below 50 indicate contraction. Typically, when ISM approaches 60 investors begin to worry about possible economic overheating, inflation increase and the corresponding measures (raising rates) by the Federal Reserve Bank. Figures below 40 entail talks about recession.
ISM is released just before unemployment data are announced, and is often used to refine data by Bureau of Labor Statistics.
- Release Frequency: monthly.
- Release Schedule: 10:00 EST, the first business day of the month.
- Source: Institute for Supply Management.
AUDUSD M5 : 32 pips price movement by USD - ISM Manufacturing PMI :
EURUSD M5 : 37 pips price movement by USD - ISM Non-Manufacturing PMI news event :
What is ISM?
A country’s economy is as strong as its supply chain. The Institute for Supply Management (ISM) measures the economic activity from both the manufacturing side as well as the service side. Formed in 1915, ISM is the first management institute in the world with over 40,000 members in 90 countries. Since it can draw from information gathered from the surveying its large membership of purchasing managers, the ISM economic news releases are carefully watched by Forex traders around the world as a reliable guide to economic activity.
- Measures : Level of a diffusion index based on surveyed purchasing managers in the manufacturing industry
- Usual Effect : actual > forecast = good for currency
- Frequency : Released monthly, on the first business day after the month ends
- Why Traders Care : It's a leading indicator of economic health - businesses react quickly to market conditions, and their purchasing managers hold perhaps the most current and relevant insight into the company's view of the economy
- Also Called : Manufacturing ISM Report On Business
The Manufacturing and Non-manufacturing PMI’s are big market movers. When these reports come out at 10:30 AM ET, currencies can become very volatile. Since these economic releases are based on the previous month’s historical data gathered directly from industry professionals, Forex traders can determine if the US economy is expanding or contracting.
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