ISM Services Index

Who: Institute for Supply Management

When: Two days after the ISM Index

What: The ISM Services Index is a national survey of purchasing managers which covers such indicators as orders, production, employment, inventories, delivery times, prices, export orders, and import orders. The ISM provides a composite diffusion index of national service sector condition. The total index is calculated based on a weighted average of the following five sub-indexes: new orders (30%), production (25%), employment (20%), deliveries (15%) and inventories (10%). Readings above 50% indicate an expanding service sector.

Why: Looked at as a good indicator for future inflationary pressures and can have a big effect on the markets. The Federal Reserve watches the report for signs of inflation among the different reporting sectors and makes adjustments to interest rates to help combat unwanted inflation. Changes in prices paid by service companies can be indicative of accelerating or decelerating inflation and future service activity can be predicted by changes in new orders.