Q: Which index in the Non-Manufacturing ISM Report On Business® is a composite index or equivalent to the PMI?
A: Beginning in January 2008, ISM began calculating a composite index for the Non-Manufacturing sector. The Non-Manufacturing Index, NMI, is a composite index based on the diffusion indexes for the following four indicators at equal weights:
Business Activity (seasonally adjusted) 25%
New Orders (seasonally adjusted) 25%
Employment (seasonally adjusted) 25%
Supplier Deliveries 25%
A NMI index over 50 represents growth or expansion within the non-manufacturing sector of the economy compared with the prior month. A reading under 50 represents contraction, and a reading at 50 indicates an equal balance between non-manufacturers reporting advances and declines in their business.