ISMs have been too downbeat on growth in recent months. The PMIs, for which we already have the flash estimates for August, continue to project stable GDP. The services ISM, out later today along with the final PMI estimate, should be given less weight at the moment given its undershooting of growth.
Old habits die hard. The ISM survey has been around since before Elvis Presley and is a favorite of markets, but at least for the last 15 years there has been an alternative in the PMI. We can use a simple regression on the composite number for each survey (a weighted average of the services and manufacturing services) to forecast quarterly GDP.
