The Institute of Supply Management's Purchasing Managers' Index (ISM PMI) is an economic indicator that measures the health of the manufacturing sector in the United States. The PMI is based on a survey of purchasing managers in various industries, who report their assessments of factors such as new orders, production, employment, supplier deliveries, and inventories.
A PMI reading below 50 indicates that the manufacturing sector is contracting, while a reading above 50 indicates expansion. Therefore, the ISM PMI that was reported at 46.3 this morning reflects a contraction in the manufacturing sector. This could be due to factors such as declining orders, reduced production, or a slowdown in hiring. A reading at 46.3 would indicate an even more significant contraction.
ISM started surveying in 1948. As this chart shows, this is the 16th time the ISM has been below 46.3 or lower. 12 of these or 75% of these instances, the economy was either in a recession or about to enter a recession.
Source: Bianco Research, LLC
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