ISM Manufacturing Index
Candlefocus EditorWhen the Manufacturing Index falls below 50, it usually indicates the US manufacturing sector is contracting. When the index is above 50 for two consecutive months, the sector is growing. An index value of 50 or above means the sector is growing, while a value of 50 or below means it is shrinking.
The PMI does not only reflect conditions in the manufacturing sector, it is also a good indicator of the overall state of the US economy. It is especially useful for forecasting future economic growth and performance. The PMI is used by investors and businesses to help make more informed decisions. In December 2022, the November 2022 PMI reported a contraction in US manufacturing, the first in 29 months.
The PMI is calculated with a complex formula that takes into account all the monthly variables mentioned above. Professionals in the finance industry use the PMI to assess the current state of the US manufacturing sector, as well as to predict potential changes in the future. A decline in the PMI can indicate reduced demand for US goods, while an increase suggests that the manufacturing sector is growing.
Overall, the ISM Manufacturing Index is an important indicator of the US economy and manufacturing sector that is used by businesses and investors for making informed decisions. Although a decline in the index does not always mean an economic decline, a drop can help reveal a possible upcoming slump or recession. In December 2022, a disappointing PMI contraction pointed to a decline in US manufacturing sector performance.