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National Association of Purchasing Managers Index is a national survey of purchasing managers which covers such indicators as new orders, production, employment, inventories, delivery times, prices, export orders, and import orders. Diffusion indices are produced for each of these categories, with a reading over 50% indicating expansion relative to the prior month, and a sub-50% reading indicating contraction.

The total index is calculated based on a weighted average of the following five sub-indices, with weights in parentheses: new orders (30%), production (25%), employment (20%), deliveries (15%), and inventories (10%).

The NAPM is one of the first comprehensive economic releases of the month, typically preceding the employment report. Though it covers only the manufacturing sector, it can often provide accurate hints regarding the tone of subsequent releases. During periods of inflation concerns, the prices paid and vendor deliveries indices often determine the bond market's reaction to the report.

Source(s):

http://www.forex-brokerage-firms.com/ economicindicators/napm.htm

A measure of the health of the manufacturing sector, and more generally the overall economy, calculated by surveying purchasing managers for data about new orders, production, employment, deliveries, and inventory, in descending order of importance. It is based on a survey of over 250 companies within twenty-one industries covering all 50 states, and it is released on the first business day of the month at 10 am EST and reflects the previous month's data. A reading over 50% indicates that manufacturing is growing, while a reading below 50% means it is shrinking. The NAPM index is also thought to be an early indicator of inflationary pressures.

The National Association of Purchasing Managers (NAPM) index is a leading indictor of economic activity. It is based on a survey of over 250 companies within twenty-one industries covering all 50 states. Its importance derives form the fact that it is the first indicator each month of manufacturing performance during the past 30-day period and is also a leading indicator of future economic activity and pricing decisions.

NAPM index. A measure of the health of the manufacturing sector, and more generally the overall economy, calculated by surveying purchasing managers for data about new orders, production, employment, deliveries, and inventory, in descending order of importance. It is based on a survey of over 250 companies within twenty-one industries covering all 50 states, and it is released on the first business day of the month at 10 am EST and reflects the previous month's data. A reading over 50% indicates that manufacturing is growing, while a reading below 50% means it is shrinking. The NAPM index is also thought to be an early indicator of inflationary pressures.