Every month, purchasing managers at businesses across the manufacturing and services sectors get asked a simple set of survey questions: is business better, worse, or the same as last month, across categories like new orders, production, employment, and supplier deliveries. Those responses get compiled into a Purchasing Managers' Index (PMI) — a single number that's become one of the fastest, most closely watched leading economic signals available anywhere in economic data. The interpretation is simple by design: a reading above 50 generally indicates expansion in that sector, while a reading below 50 generally indicates contraction, with the specific distance from 50 reflecting the strength of that expansion or contraction.
In the U.S., the Institute for Supply Management (ISM) publishes some of the most closely watched PMI-style surveys, covering both manufacturing and services separately, since the two sectors can genuinely diverge — a manufacturing slowdown doesn't automatically mean the much larger services sector is slowing too, and vice versa. Part of what makes these surveys so valuable is timing: they're typically released very early in the following month, often well before more comprehensive "hard" government data covering the same period becomes available — giving analysts and investors a genuinely earlier read on economic direction than they'd otherwise have.
Correct moves you up, wrong moves you down — reach 100 to master this lesson.