ISM Services PMI

The ISM Services PMI, formerly known as the non-manufacturing index, surveys purchasing executives at firms in industries ranging from retail and finance to healthcare, utilities, construction and hospitality. Respondents report whether business activity, new orders, employment and supplier deliveries improved or worsened on the month, and the headline is the equally weighted average of those four diffusion indexes. Fifty is the dividing line between expansion and contraction.

Services make up the bulk of US output and employment, so this index is sometimes a better read on the overall economy than its better-known manufacturing sibling. Since inflation in services has tended to be stickier than in goods, the prices-paid component attracts particular attention from those trying to gauge how persistent price pressure will be. A strong headline or a jump in prices has historically tended to push yields and the dollar higher; a sharp drop has been read as a warning about the consumer-facing economy.

Unlike the manufacturing survey, the services headline measures business activity directly rather than production, and its history is much shorter, which limits comparisons across cycles. Readings can be volatile month to month, and seasonal adjustments are updated annually. Industry comments published with the release often explain surprises better than the numbers do.

The employment sub-index, arriving just before payrolls, is scanned for hints but has a mixed record as a predictor. S&P Global publishes a rival services PMI earlier in the same week, and the two occasionally disagree.