Market Commentary

ISM Services

ISM (Institute of Supply Management) report

There are two parts of the ISM (Institute of Supply Management) report usually released a day or two apart. There is a report on the manufacturing sector in our economy and one in the services sector. Our economy is dominated by services so this sector is more impactful. For September, the number was 57.8% from 56.9 the month before. A reading above 50 indicates expansion and below 50 contraction for the overall economy. Services include retailers, restaurants, banks, hospitals, and the like and this expansion has extended to four months in a row.

It is important to note that this report is derived from a survey of executives. They are asked how business is going, has it gotten better or worse compared to the prior month. What it does not reveal is how better or worse was it. Therefore, you cannot really extrapolate its reading to determine how well the economy is doing. For that, you have to look at other indicators. Then again with four months in a row of improvement, with COVID still impacting the overall economy, it is a good sign that the recovery should continue, barring any new shutdowns.