How Does ISM Mfg PMI Affect Stocks & ETFs?

The ISM Manufacturing Purchasing Managers' Index is a survey-based diffusion index where readings above 50 indicate expansion and below 50 indicate contraction in the manufacturing sector. Sub-components track new orders, production, employment, supplier deliveries, and inventories.

PMI is one of the earliest reads on economic momentum each month. The new orders component is particularly forward-looking. A drop below 50 has historically preceded recessions. The prices paid sub-index is watched as an inflation signal.