ISM Report On Business

The ROB is based on a national survey of purchasing managers tracking changes in the manufacturing and services sectors.

[1] In addition to being market moving, the ROB makes an important contribution to the American statistical system and to economic policy.

selected Edward T. Gushee, a purchaser from Detroit, Michigan, to supervise the organization's survey group and expand the information they gathered.

In 1930, U.S. President Herbert Hoover sought information that could help resolve the economic difficulties of the Great Depression.

The index, based on analytical work by the DOC, adjusts four of the five components of ISM's monthly survey — new orders, production, employment, supplier and deliveries — for normal seasonal variations, adds in inventories, applies equal weights to each and then calculates a single monthly index number.

An update of research performed by Theodore S. Torda, a DOC economist, shows a close parallel between growth in real Gross Domestic Product (GDP) and the PMI.

The percent response to the "Better," "Same," or "Worse" question is difficult to compare to prior periods; therefore, ISM diffuses the percentages for this purpose.

On June 2, 2014, ISM released the ROB and then revised it twice in the span of about two-and-a-half hours, a highly unusual event.

The initial figure of 53.2 was lower than anticipated and indicated a slowing of the pace of factory-sector growth, and this caused stocks to dip instantly.

Economists immediately queried the accuracy of the report and determined that ISM had incorrectly applied seasonal adjustments from the previous month.

ISM's final correction of 55.4 was almost in line with Wall Street expectations, indicating brisk growth, and the stock market rebounded quickly and closed the day with a modest gain.

In a statement, ISM attributed the errant report to a software glitch that "incorrectly used the seasonal adjustment factor from the previous month."