ISM Services (Report On Business) in United States

The ISM Services (Report On Business) is a composite diffusion index drawn from a survey of purchasing managers in the US non-manufacturing sector. A reading above 50 signals expansion and below 50 contraction. It includes sub-indices for Business Activity, New Orders, Employment and Prices.

A monthly Institute for Supply Management survey of purchasing managers at services firms. Each component is a diffusion index, and the headline weights four sub-indices equally: Business Activity, New Orders, Employment and Supplier Deliveries.

The services sector accounts for most of US output and employment, so this index is a key gauge of the cycle. The Prices sub-index foreshadows services inflation, closely watched by the Federal Reserve; a strong reading tends to support the dollar and yields.

It is a qualitative survey that gauges the direction of change rather than its magnitude, and it has historically been more volatile than the manufacturing index. It should not be confused with the S&P Global Services PMI, which comes from a different provider.