ISM Services PMI
A monthly U.S. services-sector purchasing managers' index from the Institute for Supply Management, watched as a timely signal of business activity, demand, employment and price pressures.
Full explanation
The ISM Services PMI is a monthly indicator of whether business conditions in the U.S. services sector are generally expanding or contracting. It is based on survey responses from purchasing and supply executives across service industries. The headline index is a diffusion index, meaning it reflects how widely conditions are improving or deteriorating rather than the exact dollar value of activity. The report also includes important subindexes such as business activity, new orders, employment, supplier deliveries, prices, inventories, backlogs, imports and exports.
Why traders watch it
Because services make up a large share of the U.S. economy, the release can shape expectations for GDP growth, inflation persistence and Federal Reserve policy. It is published early in the month, before many official hard-data indicators, so it can move markets when it differs from forecasts.
Market interpretation
- FX
- A large upside or downside surprise can move the U.S. dollar through changes in growth and interest-rate expectations.
- Rates
- Treasury yields may react if the report changes expectations for Federal Reserve policy, especially when prices or employment components surprise.
- Equities
- Equity markets may focus on whether the report points to resilient demand, margin pressure from prices, or a weakening growth outlook.
- Commodities
- The prices and supplier-delivery components can influence perceptions of input-cost pressure and supply-chain tightness.
Stronger vs weaker outcomes
A higher-than-expected reading may suggest broader improvement in services activity and stronger demand conditions, which can support higher growth and rate expectations if confirmed by the details.
A lower-than-expected reading may suggest softer services momentum or weaker demand, especially if new orders and employment also deteriorate.
Higher readings generally point to broader services expansion; lower readings point to weaker breadth of activity.
Typical volatility
High. Volatility is often highest when the headline, prices index or employment index materially differs from consensus forecasts.
Trading considerations
- Check the headline PMI together with new orders, employment and prices; markets may fade a headline surprise if the details conflict.
- Remember that readings above or below 50 describe expansion or contraction breadth, not the magnitude of output growth.
- Watch for simultaneous or nearby U.S. releases that can dilute or amplify the reaction.
- Liquidity and spreads can change around the 10:00 a.m. Eastern Time release window.
Educational guidance only — never a trading signal or recommendation.
Related indicators
ISM Manufacturing PMI
A monthly survey of U.S. manufacturing purchasing managers that indicates whether factory activity is expanding or contracting.
ISM Manufacturing Employment Index
A monthly diffusion index within the ISM Manufacturing PMI report that tracks whether U.S. manufacturers are reporting improving or worsening employment conditions.
ISM Manufacturing Prices Index
A monthly survey gauge showing whether U.S. manufacturers are broadly paying higher or lower input prices.
ISM Manufacturing New Orders Index
A survey-based gauge of whether new orders at U.S. manufacturers are increasing or decreasing compared with the prior month.