Service sector

Comparison of SP Global and ISM Service Sector Surveys

Two different surveys of US service sector business conditions are provided by S&P Global (formerly IHS Markit) and ISM.

In this note, we examine some of the differences between the two surveys, which may help explain why the two surveys sometimes diverge to send different signals about the health of the services sector in the United States.

Sector coverage

The first and most striking difference between the two surveys is that of sectoral coverage. While the S&P Global PMI for the services sector only includes data provided by companies operating in the U.S. services economy, encompassing a variety of consumer, business and financial services that are provided by the private sector ( or otherwise billed), the ISM Services PMI actually covers any activity other than manufacturing.

The ISM definition therefore includes construction, utilities, agriculture, retail trade and various aspects of public administration (see table), many of which can blur, dim or distort the health picture of the service economy. Public sector activity, in particular, will tend to dampen any trend in the business cycle, especially any slowdown in private sector activity, hence its exclusion from the S&P Global survey.

Also note that S&P coverage is consistent with all utility PMIs in other countries, allowing for international comparability. The broader ISM definition that includes non-services businesses in the services PMI means that any international comparison is potentially misleading.

Survey panel sizes

At 400 companies with a typical response rate of 85%, S&P Global’s services sector survey panel is considered larger than ISM’s panel size, which was previously listed at 300, although any references to actual panel size and response rates no longer appear on the ISM. Press Releases. Thus, unlike S&P Global, as far as we can be sure, ISM does not disclose the actual number of questionnaires received, which makes it more difficult to perform due diligence on the quality of the data.

size of the company

The survey respondent bases differ in terms of company size, with S&P Global stratifying its panels not only by sectoral contribution to GDP, but also ensuring an appropriate mix of small, medium and large companies in each sector. In contrast, ISM data is based on ISM members and as such is likely to be biased towards large companies, with small and medium-sized companies being under-represented.

Since small businesses often behave differently than large businesses during different stages of the business cycle, or in response to changes in policy or international economic conditions, it is important for any survey to ensure a robust representation of all different business sizes.

Survey Contributors

The surveys are based on the responses of different companies: the intention is that the structures of the ISM and S&P Global survey panels accurately reflect the true structure of the economy, although it should be remembered that S&P Global and ISM are in practice likely to address different approaches. companies to participate in their surveys, so the results naturally reflect the business conditions of different companies.

Note also that survey respondent bases are different in terms of job function: S&P Global surveys extend to other job functions, while ISM data is based only on purchasing and supply professionals. Note that S&P Global has moved away from focusing solely on the purchasing profession, as such roles have often proven to be less suitable for surveys outside of manufacturing, where the purchasing manager is often less involved in core business. commercial business and is busier. in office and computer supplies, etc. Contributors to S&P Global’s service surveys typically hold a finance or other C-level position or, in smaller companies, a CEO or owner.


While the ISM uses questions relating to supply chain management (including inventory inventory), S&P Global has found that this type of question is often irrelevant for many service industries. S&P Global instead focuses on fundamental issues more relevant to business activities in sectors such as banking, legal and accounting.

Weighting systems

S&P Global surveys use a weighting system to ensure that the results accurately reflect the true official structure of the economy. The weights reflect both the size of the company and the relative importance of the sub-sector in which the company operates. A large company in a large sector will therefore have a proportionally higher weight in the survey results than a small company in a smaller sector. We understand that the ISM surveys do not include such a weighting process in the calculation of the results, but rather depend on the “self-weighting” of the panels.

Seasonal adjustment

Surveys use different methods of seasonal adjustment, with the S&P Global PMI indices using X13 to estimate seasonal adjustment factors for the latest figures each month. The ISM, on the other hand, uses a system in which seasonal adjustment factors for the coming year are predicted in advance. The ISM methodology means that the most recent data is not actually used in the process of estimating seasonal factors, which becomes an increasingly significant drawback as the calendar year progresses. ISM also revises its seasonal adjustment factors, while S&P Global does not make such revisions.

Calculation of the global PMI

The ISM produces a composite global PMI for services, based on individual indices including new orders, business activity, employment, supplier delivery times and inventories. S&P Global sees no value in compiling such an aggregate index and instead prefers to simply use the Business Activity Index as the title of the survey, as it measures the overall output of the sector. This services activity gauge can be easily aggregated with the equivalent production index for the manufacturing sector to produce a reliable and timely guide to overall economic growth, or GDP.

Chris Williamson, Chief Economist, S&P Global Market Intelligence

Tel: +44 207 260 2329

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Purchasing Managers’ Index™ (PMI™) data is compiled by IHS Markit for over 40 economies worldwide. Monthly data are drawn from surveys of senior executives of private sector companies and are available by subscription only. The PMI data set includes a headline figure, which indicates the overall health of an economy, and sub indices, which provide insight into other key economic drivers such as GDP, inflation, exports, l utilization, employment and stocks. PMI data is used by finance and business professionals to better understand where economies and markets are going and to uncover opportunities.

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This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.