The ISM US Purchasing Manager’s Index (PMI) tracks takes a rather indirect approach to gauging manufacturing productivity. Rather than collate hard data on how much of what was created and shipped, etc., it’s a survey of industrial purchasing managers. The purchasing managers- people who make decisions about supply chains and resource flows- are asked whether business expanded or contracted.

This method provides us with a relatively rule-of-thumb gauge of productivity. When the Index registers above 50, that means manufacturing expanded according to the managers. When it registers below 50, it contracted.

The real value of this Index is that it gives investors an early snapshot for the given period of where things generally are headed. Indexes that give harder numbers take longer to produce and often take months- after necessary revisions- to arrive at the precise number. So whereas more exact gauges lag the current state of investor information, the PMI leads our expectations.