What This Chart Shows
This chart overlays the ISM Manufacturing PMI (shifted forward 2 months) against the month-over-month change in Total Nonfarm Payrolls. Both series are converted to Z-scores — standard deviations from their historical mean — so they plot on the same scale for direct visual comparison. The 2-month lead captures the lag between manufacturing sentiment turning and that signal flowing through to employment data.
Hover any data point to see both the Z-score and the raw underlying value (NFP in thousands, ISM index level). The zero line marks each series' historical average. Grey shaded regions mark NBER recession periods.
How to Read It
When both Z-scores decline in lockstep, the signal is strong — manufacturing weakness is pulling employment down with it. Divergences are equally telling: if ISM's Z-score drops while NFP holds, the labor market hasn't yet absorbed the manufacturing shock (a lagging confirmation signal). Historically, when ISM's Z-score crosses below zero and keeps falling, NFP follows within 1-3 months. The chart also reveals regime breaks — like post-COVID fiscal stimulus holding payrolls elevated even as manufacturing weakened.