ISM Manufacturing Prices Paid is one of the diffuse indicators, based on which the Supply Management Institute calculates the Manufacturing PMI. It reflects a change in prices paid by industry representatives for the products or services they receive.
The index calculation is based on data collected from a monthly survey of supply managers from 18 US industries. Respondents estimate prices paid in the production process: whether they have grown, fallen or have not changed. The collected data are processed and compiled to a diffuse index. The index weight in the total manufacturing PMI calculation is 20%.
The ISM Manufacturing Prices Paid index is usually closely correlated with the producer price index at an intermediate state of production. Index growth can serve as a leading inflation indicator: producers have to pay more to suppliers, that is why the price of the final product is likely to grow.
However, the index generally does not influence dollar quotes directly and is normally interpreted as part of PMI.
The chart of the entire available history of the "ISM United States Manufacturing Prices Paid" macroeconomic indicator. The dashed line shows the forecast values of the economic indicator for the specified dates.
A significant deviation of a real value from a forecast one may cause a short-term strengthening or weakening of a national currency in the Forex market. The threshold values of the indicators signaling the approach of the critical state of the national (local) economy occupy a special place.
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