Broker Check
The ISM's Purchasing Managers Index is Out and Here is Why You Should Care

The ISM's Purchasing Managers Index is Out and Here is Why You Should Care

April 03, 2023

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

The views stated in this letter are not necessarily the opinion of Cetera Advisors LLC and should not be construed directly or indirectly as an offer to buy or sell any securities mentioned herein. Due to volatility within the markets mentioned, opinions are subject to change without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. Past performance does not guarantee future results.