A break of the range of estimates for ISM Services PMI should prompt extended market move

The ISM Services PMI (Purchasing Managers’ Index) is due Tuesday, 5 December 2023 at 10am US Eastern time.

The range of estimates is 50.5 to 53.5, results outside of this range should be more likely to generate an extended market response.

Its released by the Institute for Supply Management (ISM)

  • based on a survey of purchasing managers in the services sector, they are asked to report on various aspects of their business activity, including new orders, inventory levels, production, supplier deliveries, and employment.
  • the headline index is derived from individual indices from such components, at differing weighs for each component
  • above 50 percent indicates that the services sector is generally expanding, while below 50 suggests that it is generally contracting
  • the distance from 50 percent gives an indication of the strength of the expansion or contraction

The services sector constitutes a significant part of the U.S. economy, and the ISM Services PMI is closely watched as a key indicator of economic health.

A significant beat of the estimate will be viewed by traders as making near-term rate cuts from the Federal Open Market Committee (FOMC). A significant miss will be viewed as likely to hasten rate cuts. Expectations in the market are for a flurry of rate cuts from the Committee in 2024. We’ll see.

This article was written by Eamonn Sheridan at www.forexlive.com. Source