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
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