ISM Manufacturing Employment

The ISM Manufacturing Employment Index is the hiring gauge inside the ISM Manufacturing PMI Report. The Institute for Supply Management in Tempe, Arizona publishes it each month. It polls purchasing and supply executives on employment at United States operations.

The panel spans 18 manufacturing industries grouped by NAICS. Each industry carries weight tied to its share of GDP. The series belongs to the Report On Business family. Replies cover domestic operations only.

It is a diffusion index, a gauge of breadth and direction across firms. It tracks how widespread change is, not total jobs gained or shed. It forms 1 of 5 equal parts of the headline Manufacturing PMI.

Readings above 50% mark expansion of factory employment. Readings below 50% mark contraction. A steady headline above 47.5% aligns with growth of the wider economy.

A steady employment reading above 50.3% aligns with gains in Bureau of Labor Statistics (BLS) payroll data. BLS is the official source of United States jobs data.

ISM sends the survey in the opening days of each month. Replies arrive through the survey month, with most arriving near its close. ISM posts the report on the publisher site at the start of the month after the survey month.

Each release prints the headline PMI with 9 other gauges. It adds a glance table with higher, same, and lower shares. It adds the chair summary with panelist remarks.

It lists commodities rising or falling in price. Published readings face no revision, since replies count as raw data. Seasonal factors update each year when conditions warrant.

Above 50% means expansion and below 50% means contraction.

Each reading rests on one survey question on hiring. Three monthly signals shape its move.

• Hiring versus reduction remarks: the share of panelists citing hiring against those citing cuts shows labor intent.
• Breadth across large industries: which of the 6 largest factory sectors report higher employment.
• Stated labor tactics: whether firms adjust through layoffs, attrition, meaning exits left unfilled, and hiring freezes.

One earlier report showed employment at 43.4%, down 5.9 points from 49.3%. Hiring remarks trailed cuts by 1 to 1.8. No large industry added workers.

The headline PMI slipped only 1.7 points to 46.8%, with Production at 45.9% and New Orders at 47.4%. The lesson is that employment can dive while the composite eases.

1. Diffusion math: add the higher share to 0.5 times the same share. For example, 14% higher, 66% same, and 20% lower give 47.0.
2. Seasonal factor: divide by the monthly factor from X-13-ARIMA, then round to 1 decimal place. For example, 47.0 divided by 0.992 gives 47.4%, below 50% and thus contraction.
3. Headline blend: average the 5 gauges with equal weight. Add New Orders, Production, Employment, Supplier Deliveries, and Inventories, then divide by 5.