The ISM index is an important data published by the American Institute of Supply Management, which has an important impact on reflecting the prosperity of the US economy and the trend of the dollar.

  The Institute for Supply Management (ISM) is the world’s largest and most authoritative professional organization in the fields of procurement management, supply management, and logistics management. The organization was established in 1915. Its predecessor was the American Purchasing Management Association. It currently has more than 45,000 members and 179 chapters. It is one of the most respected professional organizations in the United States.

ISM index
  The ISM index is divided into two categories: manufacturing index and non-manufacturing index.

   ISM Supply Management Association Manufacturing Index is composed of a series of sub-indexes, among which the purchasing managers index is the most representative. The index is a barometer reflecting the comprehensive development status of the manufacturing industry in terms of production, orders, prices, employees, and delivery. It usually takes 50 as the critical point. If it is above 50, it is considered that the manufacturing industry is in a state of expansion. It means that the manufacturing industry is shrinking, affecting the pace of economic growth.

The ISM Institute for Supply Management Non-manufacturing Index reflects the prosperity of non-manufacturing business activities in the United States. When its value is continuously above 50, it indicates that non-manufacturing activities are expanding and prices are rising, which often indicates that the overall economy is in an expansion. On the contrary, when its value is continuously below 50, it often indicates that the overall economy is in a state of contraction.

   (Second). IFO Economic Sentiment Index

  IFO Business Climate Index (IFO Business Climate Index) is compiled by the German IFO Research Institute, and is an important leading indicator for observing the state of the German economy. IFO is the English abbreviation of the Registered Association of the German Institute of Economic Information. It was established in Munich in 1949. It is a public welfare and independent economic research institute, known as one of the German government think tanks.

The compilation of the IFO Economic Prosperity Index surveys various industrial sectors including manufacturing, construction, and retail every month. The number of entrepreneurs covered in each survey is more than 7,000, and the current situation is assessed based on the company , As well as the short-term enterprise plans and the index compiled for the next six months.

   Since the IFO Economic Sentiment Index publishes information monthly and surveys companies’ views on the future, and covers a wide range of sectors, it has a high reference for economic trend forecasting.

   ISM Manufacturing Index Significance

  The Institute for Supply Management (ISM) is the world’s largest and most authoritative professional organization in the fields of procurement management, supply management, and logistics management. The organization was established in 1915. Its predecessor was the American Purchasing Management Association. It currently has more than 45,000 members and 179 chapters. It is one of the most respected professional organizations in the United States. The ISM index is divided into manufacturing index and non-manufacturing index. ISM manufacturing data assesses the state of the US economy by investigating executives’ expectations of future production, new orders, inventory, employment and delivery. Although manufacturing accounts for a very small part of GDP, fluctuations in manufacturing have an important effect on changes in GDP. Therefore, the development of manufacturing usually precedes the overall economy, making ISM manufacturing data a leading indicator of economic reversal. After a period of recession, the acceleration of demand for manufacturing products, and the rise in ISM data, is likely to imply that the economy will turn upward. Conversely, during the period of economic expansion, manufacturing orders and production slowed down, suggesting a slowdown in the economy. The ISM manufacturing survey is valued because of its timeliness. Analysts pointed out that ISM is expected to become one of the most important data to promote market volatility when economic expansion slows down. The argument lies in the ISM’s payment price index and employment breakdown. These two sub-items reflect confidence in inflation and labor conditions-the two most important indicators of economic health. In view of the timeliness of ISM, the information disclosed from these sub-items must precede other data (such as non-agricultural employment reports or CPI), making ISM an important indicator. The data is basically published in the form of diffusion indicators for the survey of respondents. For each sub-item (production, new orders, etc.), the expected “increase” percentage of the respondents plus half of the expected “unchanged” percentage, minus the expected “decline” percentage, and the final increase in each sub-item It is the ISM manufacturing index. Data above 50 generally indicates expansion, and data below 50 indicates recession.