ISM Manufacturing Index
Market Impact Scenarios:
ISM Manufacturing Index is a leading indicator of the U.S. economic health. Despite the manufacturing sector accounting for a relatively small portion of the U.S. GDP, traders attach a lot of importance to this index because fluctuations in manufacturing tend to cause maximum changes in final GDP numbers. A reading above 50 signifies growth in the manufacturing sector, and is seen as positive (or bullish) for the USD, whereas a figure below 50 is seen as negative (or bearish) for the USD.
ISM Manufacturing Index Definition:
The ISM Manufacturing Index is compiled from a survey of about 400 purchasing managers and supply executives, who are asked to rate the relative level of various business conditions like employment, production, prices, new orders, supplier deliveries, and inventories. For each sub-category of the survey (production, employment, new orders etc), the index is calculated by obtaining the net difference between the percentage of responses in the positive economic direction and the percentage of responses in the negative economic direction. The final figure is the aggregate of the results for all the sub-categories, and is expressed as a diffusion index. It is generally accepted that a reading above 50 indicates an expansion in manufacturing, and any figure above 43 but less than 50 denotes that the U.S. economy is still growing even though manufacturing is contracting. A level below 43 signifies that the economy is in recession.
- See more at: http://www.forexnews.com/blog/2013/07/01/ism-manufacturing-index/#sthash.QkaWAG41.dpuf
