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The Origin of the Manufacturing and Non-Manufacturing ISM Report On Business®

The origin of the Manufacturing ISM Report On Business® can be traced as far back as the early 1920s. The local purchasing management association of New York, an affiliate of the National Association of Purchasing Agents (predecessor of the National Association of Purchasing Management, now the Institute for Supply Management), had been polling its members for several years on the availability of specific commodities.

In 1923, ISM adopted this polling technique to survey its members on commodities across the country. The results of these surveys were published in ISM's membership publication. For three years, there was no solid structure or guidelines on the implementation of the surveys. Then, in 1926, ISM selected Edward T. Gushee, a purchaser from Detroit, Michigan, as the chairman to supervise the activities of this survey group. It was at this time, ISM decided to expand the scope of information it gathered from its membership for the survey.

In 1930, the United States was still experiencing the drastic economic impact of the stock market collapse and the Depression. In office a little over one year, U.S. President Herbert Hoover, faced with the traumatic difficulties brought on by these events, was looking for answers. The president and other leading businessmen were concerned over the lack of information to assist them in resolving the economic conditions in the United States. The U.S. Chamber of Commerce had organized, with President Hoover's approval, a committee to gather pertinent business data from companies who were members of the Chamber. However, after numerous efforts to gather information, the committee was disbanded in June 1931.

John R. Whitehead, who was the recently elected president of ISM and represented ISM on this committee, wanted to continue the efforts of the committee. He believed that this was a project the purchasing association could carry on, not only for the benefit of the country's economy, but also to assist purchasing professionals with performing a more effective job for their organizations during these difficult times. George A. Renard, the executive secretary of ISM at the time, agreed with Whitehead on conducting the program. Under the leadership of Whitehead and Renard, the newly-founded Business Survey Committee surveyed the association membership on current business conditions. Renard tabulated the results and then sent them directly to President Hoover.

Because of the positive feedback from ISM members and the government on the surveys, ISM was inspired to survey its members and release the information on a regular basis. Except for a four-year interruption during World War II, because of the difficulty of businesses operating under full-scale war conditions, the report has been published since 1931 for ISM's membership and other interested organizations and individuals.

Covering the Non-Manufacturing sector, ISM debuted its newest economic report in June of 1998. The Non-Manufacturing ISM Report On Business® is released on the third business day of each month, and is based on data compiled from monthly surveys sent to more than 375 purchasing executives working in the non-manufacturing industries across the country. Each month, these survey responses reflect change, if any, in the current month's report compared to the previous month. The report covers Business Activity, New Orders, Backlog of Orders, New Export Orders, Inventory Change, Inventory Sentiment, Imports, Prices, Employment and Supplier Deliveries.

Beginning with the January 2008 Non-Manufacturing Report On Business®, a composite index is calculated as an indicator of the overall economic condition for the non-manufacturing sector. The NMI is a composite index based on the diffusion indexes for four of the indicators with equal weights: Business Activity (seasonally adjusted), New Orders (seasonally adjusted), Employment (seasonally adjusted) and Supplier Deliveries.