The Purchasing Managers’ Index (PMI) garners quite a lot of attention and it has been said that it was former Federal Reserve chairman Alan Greenspan’s Desert Island Statistic – the one he would need to conduct policy if he were stranded on a desert island and only had access to one economic indicator. The PMI is the headline index of the Manufacturing ISM Report on Business. This report is created by the Tempe, Arizona based Institute for Supply Management (ISM), a not for profit professional association and is made available on ISM’s website at on the first business day of every month, after 10 a.m. ET.

The Report on Business discusses the current readings of ten seasonally adjusted diffusion indices constructed by the ISM from the responses to a survey of approximately 400 purchasing managers across the United States. The survey polls participants about their opinions on prices of materials paid in the production process, production levels, new orders, order backlog, the speed of supplier deliveries, inventories, customer inventories, employment, new export orders, and imports. The PMI is a weighted composite of the following five indices:

1.New orders
4.Vendor performance

The ISM manufacturing report is valued not only for the diffusion indices but also for the accompanying discussion and comments made by the purchasing and supply executives participating in the survey. Together, the indices and executives’ anecdotal insights form a fairly detailed picture of the state of the manufacturing sector

The Manufacturers’ Shipments, Inventories, and Orders, or M3, survey is one of the most respected economic indicators. Published monthly by the U.S. Department of Commerce’s Census Bureau, the report measures current activity and future commitments in the U.S. manufacturing sector. Using data supplied by approximately 4,700 reporting units of businesses in eighty-nine industry categories, it provides statistics on the value of factories’ shipments, new orders, unfilled orders, and inventories.

The M3 survey is published in two parts. The Advance Report on Durable Goods is released about four weeks after the reference month, on approximately the eighteenth business day of the month. The revised and more comprehensive Manufacturers’ Shipments, Inventories, and Orders appears about a week later and supplies greater detail about production, by industry group, as well as including information about nondurable and durable goods.

Manufacturing orders are considered to be a leading economic indicator because they reflect decisions about optimal inventory levels given the demand businesses anticipate based on their economic forecasts. The Census Bureau obtains its data on domestic manufacturing through surveys of manufacturing companies with annual shipments totaling $500 million or more. Participation is voluntary and responses are sent via the Internet, telephone or fax. The reports contain both seasonally adjusted and non adjusted figures for the record month and for the previous three months, together with percentage changes from month to month. All the values are nominal, given in constant-dollar terms.

The M3 report is considered a gold mine of economic information. The durable new orders data is touted as a particularly rich lode due to the insight provided into a large component of personal consumption and capital expenditures.