In a recent post, Charles Dominick remains relentless in his jihad to surface the shortcomings of ISM's indexes (even though Charles is right in much of his analysis, in my view, readers should note that Charles's firm, Next Level Purchasing, is a competitor to ISM). In this most recent barrage, Charles' stinger missile target is ISM's PMI numbers which he believes ISM intentionally misleads readers of its survey into correlating with GDP figures. According to Charles, "The PMI is supposed to measure economic activity in the manufacturing sector, completely independent of the services sector (which, essentially, makes it independent of the majority of the US economy)." But now ISM is "trying to correlate manufacturing activity with overall economic activity in a rather non-sensical way."
To learn out more about how they're doing it, I'd suggest reading the rest of Charles' post. I'd suggest to Spend Matters readers that Charles' views are not isolated, although he's one of the first to express them in such a concerted manner. But it takes more than one jester to convince others that the emperor's clothes aren't really there at all. As a final aside, I spoke to a colleague today who runs what I'd describe as a sub $25 million highly niche non-manufacturing business who is one of those firms that ISM surveys in their monthly research. Knowing exactly what space this venture is in and the state of the specific market, I can state with full authority that their market niche -- and size -- has absolutely no bearing on the overall services economy at large.
- Jason Busch