As mentioned earlier, ISM stands for Institute for Supply Management and the non-manufacturing pmi, like the name suggests, it reffers to the non manufacturing industry, so basically to the services industry.
The indicator is a survey based on questions that are addressed to managers in the industry, asking them to rate level or orders in the company, employment level, new orders to come, etc, questions relevant for having an educated guess about a specific company that is active in the the service sector. This being a survey, the result is comprised in this econommic indicator, with values higher or lower than the fifty level. Higher values than fifty indicate the sector is expanding, while lower values indicate the sector is contracting, so the line between an expanding economy and an economy that is in recession is defined by this indicator.
That makes the ISM non-manufacturing pmi to be a first tier economic data, watched closely by traders all over the world. Because of the quantitative easing that is going on in all major economies, the employment component of the ISM is watched with interest and high levels of volatility are expected surrounding the ISM release date.
Based on our six month past data that we analyze, we have a clear positive trend, in the sense that all the releases in the past six months were about the 50 level, signalling still an economy that is expanding.
The important things to take into consideration when looking at ISM Non-Manufacturing PMI are the following:
- release date: monthly, on the first business day after the month ends;
- Release time: 14:00 GMT, during North American Trading session;
- ISM>50 = positive for currency;
- ISM first tier data;
- employment component.