Breaking down what the ISM New Order Index is trying to tell you.
What is the ISM New Order Index?
ISM New Order Index shows the number of new orders from customers of manufacturing firms reported by survey respondents compared to the previous month.
A reading over 50 shows orders have risen from the previous month while a reading below 50 shows a decline in orders. A reading at 50 would suggest no change from the previous month.
Why is the ISM New Order Index valuable?
The New Order Index is a strong indicator of upcoming market action. When orders are up and there is new order growth, it is typically a sign of economic expansion. A steady fall in new orders can be an indicator of a future recession.
What should you do?
Watching the ISM New Order Index is a strong place to look at what direction the economy is headed in as it provides details on economic trends and conditions. Majestic’s CORE Report follows the ISM New Order Index; along with other indicators every week to see where the market stands.
Sources: Market Realist