1. Economic Indicators: Introduction
  2. Economic Indicators: Beige Book
  3. Economic Indicators: Business Outlook Survey
  4. Economic Indicators: Consumer Confidence Index (CCI)
  5. Economic Indicators: Consumer Credit Report
  6. Economic Indicators: Consumer Price Index (CPI)
  7. Economic Indicators: Durable Goods Report
  8. Economic Indicators: Employee Cost Index (ECI)
  9. Economic Indicators: Employee Situation Report
  10. Economic Indicators: Existing Home Sales
  11. Economic Indicators: Factory Orders Report
  12. Economic Indicators: Gross Domestic Product (GDP)
  13. Economic Indicators: Housing Starts
  14. Economic Indicators: Industrial Production
  15. Economic Indicators: Jobless Claims Report
  16. Economic Indicators: Money Supply
  17. Economic Indicators: Mutual Fund Flows
  18. Economic Indicators: Non-Manufacturing Report
  19. Economic Indicators: Personal Income and Outlays
  20. Economic Indicators: Producer Price Index (PPI)
  21. Economic Indicators: Productivity Report
  22. Economic Indicators: Purchasing Managers Index (PMI)
  23. Economic Indicators: Retail Sales Report
  24. Economic Indicators: Trade Balance Report
  25. Economic Indicators: Wholesale Trade Report

The Institute for Supply Management (ISM) releases the “ISM Non-Manufacturing Report on Business,” also known as the Service Report, each month. The ISM, a non-profit group with more than 40,000 members engaged in the supply management and purchasing professions, saw the need to represent more than just the manufacturing industry, and especially to give attention to the notoriously absent service sector, which reflects the majority of real gross domestic product (GDP).

The report is released on the third day of each month and is based upon data from the prior month. The data has been published by the ISM since 1998, though they did not begin to release the current composite index in its current form until 2008.

The report is compiled by surveying about 400 purchasing managers in about 60 non-manufacturing industries across the U.S. These include:

  •          Construction
  •          Mining
  •          Agriculture
  •          Communications
  •          Transportation
  •          Retail

 

Why The Non-Manufacturing Report is important

The entire report relates to investors because it represents a much larger share of the economy and, most importantly, it covers the hard-to-measure services industries, the fastest-growing part of the U.S. economy. The survey covers many of the same categories that are found in the Purchasing Manager’s Index (PMI,) including employment, supplier deliveries, inventory levels, production levels and prices.

However, the breadth of coverage is what makes the data compelling for investors. The services and non-manufacturing sectors comprise an increasingly large share of the economy.

For investors, the Service Report may be more useful than the PMI for examining the status of the industries in which they hold investments, and examining the trends taking place in that corner of the market. Each index (there are 10 in total) can be looked at individually, but the Business Activity Index is the most comprehensive; it asks whether the overall business conditions will be better, the same, or worse in the upcoming month.

 

Strengths:

  • Consistent and timely; comes out on the third business day of every month, right after the PMI report
  • Shows results for the majority of the total economy, most notably the services industries
  • When used with the ISM Manufacturing Report, the two reports will capture industries making up nearly 90% of total GDP
  • Anecdotal remarks within the release can provide a better perspective from actual professionals
  • Release shows percentage changes from the previous two months separately, as well as the length of any trend along with its relative velocity

 

Weaknesses:

  • Survey is very subjective in its data retrieval compared to other indicators, using measures such as "higher", "lower" and "the same"
  • As a relatively new data series, the Service Report fails to provide long-term historical data and correlations to prior business cycles can't be analyzed.

Economic Indicators: Personal Income and Outlays
Related Articles
  1. Trading

    Using The ISM Manufacturing Index To Find Forex Trends

    Learn the details behind the ISM Manufacturing Index and how you can use this data to find trends in the foreign exchange market.
  2. Insights

    What is the Purchasing Managers' Index?

    The Purchasing Managers’ Index, or PMI as it is commonly called, is an indicator of the economic health of the manufacturing sector.
  3. Insights

    Introduction To Coincident And Lagging Economic Indicators

    Investors can learn a lot, or very little, from these indicators once they know how to use them.
  4. Investing

    CPI, Beige Book and Other Economic Indicators That Do-It-Yourself Investors Should Know

    Understanding these investing tools will put the market in your hands.
  5. Insights

    How Is the GDP of India Calculated?

    India is a front-runner among developing economies. Investopedia explains how India calculates its GDP, an indicator of economic health and performance.
  6. Insights

    The Canadian Economy, At A Glance

    The 12 economic indicators described here together provide a comprehensive picture of the state of the Canadian economy.
  7. Personal Finance

    The Week Ahead: August 1-5, 2016

    A look ahead at the coming weeks economic events and data releases.
Frequently Asked Questions
  1. Why Do Most of My Mortgage Payments Start Out as Interest?

    Fear not: Over the life of the mortgage, the portions of interest to principal will change.
  2. What is the difference between secured and unsecured debts?

    The differences between secured and unsecured debt, and how banks buffer risks associated with each type of loan through ...
  3. How Many Times has Warren Buffett Been Married?

    Warren Buffett has been married twice in his life, but the circumstances surrounding the marriages were unconventional.
  4. What's the smallest number of shares of stock that I can buy?

    Many people would say the smallest number of shares an investor can purchase is one, but the real answer is not as straightforward. ...
Trading Center