ISM Makes Annual Adjustments to Seasonal Factors for ISM Manufacturing PMI® and Diffusion Indexes and ISM Non-Manufacturing NMI® and Diffusion Indexes

TEMPE, Ariz., Jan. 29, 2016 /PRNewswire/ -- Based on input from an independent expert, Institute for Supply Management® recently announced the completion of its annual adjustments 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 that changes are effective with the January 2016 ISM Manufacturing Report On Business®, which is scheduled to be released on February 1, 2016, and the January 2016 ISM Non-Manufacturing Report On Business®, which will be released on February 3, 2016.

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 one year ahead (2016).

As in previous years, the X-13-ARIMA program was used to develop the revisions to the Manufacturing and Non-Manufacturing indexes for 2011 through 2015, as well as the 2016 projected seasonal factors. The 2016 seasonal factors will be recomputed when the actual data are known in early 2017. Projected seasonal factors for 2016 are shown below.

To compute the PMI®:

1)  Calculate the unadjusted diffusion index for New Orders, Production, Employment and Supplier Deliveries to two decimal places (percent higher or slower plus one half of the percent same or unchanged). For Inventories, it will be percent higher plus one half of the percent same or unchanged.

2)  Divide each unadjusted diffusion index by its seasonal factor (round to one decimal place).

3)  Add all five index numbers together and divide by five.

To compute other indexes, follow steps #1 and #2 above for each indicator.

To compute the NMI®:

1)  Calculate the unadjusted diffusion index for Business Activity, New Orders and Employment to two decimal places (percent higher or up plus one half of the percent same or unchanged). For Supplier Deliveries, it will be percent slower plus one half of the percent same or unchanged.

2)  Divide each unadjusted diffusion index by its seasonal factor (round to one decimal place).

3)  Add all four index numbers together and divide by four.

To compute other indexes, follow steps #1 and #2 above for each indicator.

For the full release, please contact Kristina Cahill kcahill@instituteforsupplymanagement.org.

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SOURCE Institute for Supply Management