ISM (Manufacturing & Services PMI)
Monthly purchasing managers' surveys from the Institute for Supply Management — leading indicators for US manufacturing and services economic activity.
What is ISM (Manufacturing & Services PMI)?
The Institute for Supply Management (ISM) publishes two monthly purchasing managers’ index (PMI) reports tracking US economic activity. The ISM Manufacturing PMI releases the first business day of each month; the ISM Services PMI releases the third business day. Both release at 10:00 AM Eastern Time.
PMI is a diffusion index: a survey of purchasing managers asked whether business conditions are better, the same, or worse than the prior month. Readings are normalized to a 0-100 scale where 50 represents no change, above 50 indicates expansion, and below 50 indicates contraction. The headline composite PMI is the most-cited number.
For futures traders, ISM is most important for its sub-indexes: Prices Paid (an inflation leading indicator that often moves Treasury futures), Employment (a leading indicator for NFP that can shift first-Friday positioning), and New Orders (a forward demand signal that influences equity sectors). The 10:00 AM ET release timing means it lands during the cash equity session — moves are immediate and visible in volume.
How ISM (Manufacturing & Services PMI) works
ISM mechanics for futures traders:
1. Release schedule. Manufacturing PMI: first business day of the month at 10:00 AM ET. Services PMI: third business day of the month at 10:00 AM ET. The Services PMI tends to be more market-moving in the current economy because services dominate US GDP.
2. The 50 line is the focus. A reading crossing from above 50 to below 50 (or vice versa) tends to produce a larger market reaction than the same headline change while staying on one side of 50. Crossing 50 changes the economic narrative.
3. Sub-index reading order. When the headline lands at consensus, the market immediately scans Prices Paid (inflation), Employment (jobs leading indicator), and New Orders. A surprise in any of these sub-indexes can drive the move regardless of the headline.
4. Employment sub-index as NFP preview. If ISM Manufacturing/Services Employment sub-indexes both come in soft a few days before NFP, it primes the market for a soft NFP — and vice versa. Traders use the combination as a positioning tool for first-Friday.
5. Volatility profile. ES typically moves 8-20 points in the first 5 minutes on a meaningful surprise. NQ moves 30-80 points. Less than 8:30 AM releases but enough to whipsaw tight stops.
6. Prop firm rules. ISM is on some prop firms’ news-restriction lists but not others. The 10:00 AM ET timing means the cash equity session is already active, so liquidity is better than 8:30 AM releases and slippage tends to be lower.
Worked example
Concrete ISM Services example — March 5, 2026:
Consensus: 52.5 headline, with sub-indexes mixed. ES at 5,220 going into 10:00 AM ET.
The release: 49.8 headline (sub-50, contraction territory, way below consensus), Employment sub-index at 47.2 (very weak), Prices Paid at 58.1 (still hot). Stagflation tone.
10:00:01 AM: ES initially rallied to 5,225 on the weak headline (“Fed cuts more likely”), then sold off to 5,208 within 4 minutes as the hot Prices Paid + weak Employment combination registered. By 10:15 AM, ES sat at 5,202 — net -18 points, with a confused initial pop that reversed sharply.
The Treasury market reaction was clearer: ZN rallied 9 ticks (yields down on growth weakness) but only 9 ticks — restrained by the hot Prices Paid. A clean dovish ISM would have moved ZN 15+ ticks.
Why traders fail ISM (Manufacturing & Services PMI)
Reading only the headline. ISM’s sub-indexes often drive larger moves than the headline. Prices Paid, Employment, and New Orders are the three to scan first.
Missing the 50-line cross. A reading moving from 51 to 49 produces a larger reaction than 53 to 51, even though the change is identical. Crossing 50 changes the narrative from “expansion slowing” to “contraction.”
Ignoring ISM Services in a services-driven economy. US GDP is roughly 80% services. ISM Services PMI matters more in 2026 than ISM Manufacturing, even though Manufacturing PMI has more historical attention.
Forgetting about NFP preview value. ISM Manufacturing Employment + ISM Services Employment, when both released before NFP, can shift first-Friday positioning meaningfully.
Frequently asked questions about ISM (Manufacturing & Services PMI)
When is ISM released?
ISM Manufacturing PMI releases on the first business day of each month at 10:00 AM Eastern Time. ISM Services PMI releases on the third business day at the same time. Both schedules are published in advance by the Institute for Supply Management.
What is the difference between ISM Manufacturing and ISM Services?
Two separate surveys covering two different sectors. Manufacturing PMI surveys industrial purchasing managers; Services PMI surveys non-manufacturing industries. In a services-dominated economy like the US, ISM Services often drives larger market reactions despite less historical attention.
What does a PMI reading above or below 50 mean?
PMI is a diffusion index where 50 represents no change. Above 50 indicates the surveyed sector is expanding; below 50 indicates contraction. Crossing 50 in either direction tends to produce larger market reactions than equivalent changes that stay on one side.
How much do futures move on ISM?
Typically 8-20 ES points on a meaningful headline surprise, 30-80 NQ points. Less than 8:30 AM releases (CPI, NFP) but still enough to whipsaw narrow stops. Sub-index surprises (Prices Paid, Employment) can drive moves even when the headline lands at consensus.
Does ISM affect Fed policy?
Indirectly — ISM doesn't directly drive Fed decisions but its sub-indexes (especially Prices Paid and Employment) are leading indicators the Fed monitors. A persistent ISM contraction signal can shift Fed-cut probabilities meaningfully over multi-month windows.