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Econoday | Resource Center
Definition The Institute for Supply Management, formerly known as the National Association of Purchasing Management, reports on business activity in the non-manufacturing sector. Readings above 50% in the ISM non-manufacturing index indicate an expanding economy.
Why do Investors Care? Investors need to keep their fingers on the pulse of the economy because it dictates how various types of investments will perform. By tracking economic data like the ISM non-manufacturing index, investors will know what the economic backdrop is for the various markets. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers less rapid growth and is extremely sensitive to whether the economy is growing too quickly-and causing potential inflationary pressures.
The ISM manufacturing index has a long history - dating to the 1940s. This new report (beginning in 1998) on the non-manufacturing sector will be just as widely followed by financial market participants as it develops its own credibility over time.
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