ISM Non-Manufacturing PMI beats expectations, signaling robust expansion in non-manufacturing sector
2025.01.07 12:12
The Institute of Supply Management (ISM) Non-Manufacturing Purchasing Managers’ Index (PMI), a key indicator of the overall economic health of the non-manufacturing sector, has outperformed expectations.
The actual figure for the ISM Non-Manufacturing PMI came in at 54.1. This number surpassed the forecasted figure of 53.5, indicating a more robust expansion in the non-manufacturing sector than initially predicted. The ISM Non-Manufacturing PMI is a composite index based on the diffusion indexes for four indicators with equal weights: Business Activity (seasonally adjusted), New Orders (seasonally adjusted), Employment (seasonally adjusted), and Supplier Deliveries.
When compared to the previous figure of 52.1, the current ISM Non-Manufacturing PMI of 54.1 shows a marked improvement. This upward trend suggests a solid growth trajectory in the non-manufacturing sector. A reading above 50 percent is generally considered positive as it indicates expansion, while a reading below 50 percent signals contraction.
The ISM Non-Manufacturing PMI is drawn from data compiled from monthly responses to questions asked of more than 370 purchasing and supply executives across over 62 different industries. These industries span nine divisions from the Standard Industrial Classification (SIC) categories, and their contributions to the Gross Domestic Product (GDP) are taken into account.
The higher-than-expected reading is a bullish signal for the USD, suggesting a positive outlook for the US economy. This robust expansion in the non-manufacturing sector could potentially lead to an uptick in employment and business activity, thereby driving economic growth.
In conclusion, the latest ISM Non-Manufacturing PMI data paints a promising picture of the health of the non-manufacturing sector. The upward trend, if sustained, could contribute significantly to the overall growth of the US economy.
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