Purchasing Managers Index: Muted Reaction Expected?
At 10AM EST on Monday, April 5th, the Institute for Supply Management (ISM) releases its monthly Purchasing Managers Index (PMI) survey minus manufacturing results.
The release is based on a monthly survey of 400 United States based purchasing managers. It asks questions regarding business conditions, employment, new orders, prices, deliveries and production. The ISM uses a scale with 50 being the middle ground. It the score comes in above 50, it is believed to indicate a growing, robust economy, below 50 indicates a shrinking economy. The theory behind the index is that purchasing managers are on the front line in the economy. They will sense and be affected first by any changes positive or negative in the underlying conditions. Therefore, knowing their sentiment may predict coming broad economic changes.
This figure is projected to be 54.3 in a continuation of the uptrend. Provided the trend of the positive internal factors affecting this number, it is indeed likely that the forecast will be met or exceeded. However, most of Europe is on holiday Monday which may mute reactions.
David Goodboy is Vice President of Business Development for a New York City based multi-strategy fund.
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