ISM Manufacturing PMI: the first-business-day survey and futures

How a diffusion index works

Respondents say whether each activity, such as new orders or production, was higher, the same or lower than the previous month. The index adds the share reporting higher and half the share reporting no change. A reading above 50 means more respondents saw improvement than deterioration; it says how widespread the change is, not how large.

The headline PMI combines five components: new orders, production, employment, supplier deliveries and inventories. Other indexes in the report, such as prices, backlog of orders and new export orders, are published but not part of the headline.

Components traders look at

• New orders: the most forward-looking part; a gap between new orders and inventories is sometimes read as a sign of future production.
• Prices: the share of respondents paying higher prices, watched as an early sign of goods inflation.
• Employment: a survey-based hint about factory hiring before the jobs report.
• Supplier deliveries: slower deliveries raise the index, which can mean strong demand or supply problems; the context decides.
• Respondent comments: quoted in the report and often used to explain a surprise.

Why futures react

Manufacturing is a smaller share of the US economy than services, but it is cyclical and sensitive to rates, trade and inventories, so the PMI is read as an early indicator of turning points. A surprise changes growth and earnings expectations for index futures, and the prices component can move Treasury futures through the inflation channel. The reaction is larger when the market is debating whether the economy is slowing or reaccelerating.

Order flow at 10:00 a.m. on the first business day

The release lands thirty minutes after the US cash open, inside the first hour of the regular session. Depth is usually higher than in the pre-market, so the step-back of liquidity before the release is often brief and limited to the inside levels. Other data can share the minute on some months, such as construction spending, and the first business day also carries the start-of-month flows of the regular session.

The initial balance, the range of the first hour, is still forming at 10:00 ET. A release that pushes price outside the opening range with initiative volume and confirming delta is a different auction from one that produces a spike inside the range, followed by rotation. The footprint of the 9:00 CT bar and the one after it usually tell which it is.

In Senzoukria

The ISM rows appear in the News calendar under US, described as “ISM survey — US business activity index.” when the name matches; the event detail shows the time in Chicago and UTC. The “Next up” range lists the next fifteen events from now, which on the last trading day of a month shows the first-business-day releases in order.

The Initial Balance indicator and the Opening Range indicator (5, 15, 30 or 60 minutes, 15 by default) draw the ranges the 10:00 ET release may break, so the footprint reaction can be read against them.