FOR RELEASE: January 29, 2008
|Contact:||Rose Marie Goupil|
|ISM, Media Relations|
|800/888-6276, Ext. 3015|
(Tempe, Arizona) — The U.S. Department of Commerce recently completed its annual adjustment to the seasonal factors used in the monthly Institute for Supply Management™(ISM) Manufacturing Report On Business® and the monthly Institute for Supply Management™ (ISM) Non-Manufacturing Report On Business®. Economists and managers who track these indexes will note these changes are effective with the January 2008 ISM Manufacturing Report On Business®, which is scheduled to be released on February 1, 2008, and the January 2008 ISM Non-Manufacturing Report On Business®, which will be released on February 5, 2008.
Seasonal adjustment factors are used to allow for the effects of repetitive intra-year variations resulting primarily from normal differences in weather conditions, various institutional arrangements, and differences attributable to non-movable holidays. It is standard practice to project the seasonal adjustment factors used to calculate the indexes a year ahead (2008).
The X12-ARIMA program was used to develop the revisions to the indexes for 2004 through 2007 as well as the 2008 projected seasonal factors for Manufacturing. For the Non-Manufacturing Report, these indexes have been revised from 2004 through 2007 also. The 2008 seasonal factors will be recomputed when the actual data are known in early 2009. Projected seasonal factors for 2008 and revised seasonally adjusted indexes are shown below, followed by charts tracking both the former and the revised PMI and Business Activity Index for Non-Manufacturing.
(Prepared by G. McKittrick, Economist, U.S. Department of Commerce, 202/482-2343)
To compute the PMI:
To compute other indexes, follow steps #1 and #2 above for each indicator.
On January 18, 2008, ISM announced a revision in the formula for calculating the PMI (composite index for the manufacturing sector). The new formula for the PMI includes the same five indexes as the past formula (New Orders, Production, Employment, Supplier Deliveries and Inventories) but at equal weights, instead of the previous weighted formula. The new formula more closely predicts the gross domestic product (GDP) for the past several years. As a result, the PMI index numbers have been revised back through 2001. The PMI numbers prior to 2001 will not be revised. The following information includes the revised PMI numbers.
The revised breakeven point for the overall economy is a PMI of 41.1 percent. A PMI over 41.1 percent indicates an expanding overall economy. A PMI below 41.1 percent indicates the overall economy is declining.
The ISM Report On Business® is considered by many economists to be the most reliable near-term economic barometer available. It is reviewed regularly by top government agencies and economic and business leaders for its timely, accurate information. The Manufacturing and Non-Manufacturing ISM Reports On Business® are published monthly by the Institute for Supply Management™. Each month, both reports are compiled from responses to questions asked of purchasing and supply executives across the country and reflects change, if any, in the current month compared to previous months. As the oldest and largest supply management institute in the world, the mission of the Institute for Supply Management™ (ISM) is to lead supply management. By executing and extending its mission through education, research, standards of excellence, influence building and information dissemination — including the renowned monthly ISM Report On Business® report — ISM continues to extend the global impact of supply management. ISM's membership base includes more than 40,000 supply management professionals in 75 countries. Supply management professionals are responsible for trillions of dollars in the purchases of products and services annually. ISM is a member of the International Federation of Purchasing and Supply Management (IFPSM).