Head-to-head comparison
Inventory-Sales Ratio vs ISM Manufacturing
Inventory-to-sales ratio vs ISM PMI — which catches the inventory cycle?
Verdict
Both wins
ISM leads; Census is the ground truth. Use both in sequence.
One-year comparison
Left axis: Inventory/Sales (green) · Right axis: ISM Manufacturing (blue)
The analysis
Both track inventory dynamics. Inventory-to-sales is an actual ratio from Census data; ISM inventories is a survey diffusion index. The Census ratio is the ground truth but lags 6 weeks; ISM inventories leads by 1-2 months. A rising Census I/S ratio combined with sub-50 ISM inventories is the sharpest inventory-liquidation signal available.
Indicator A
Inventory/Sales
Track the business inventory-to-sales ratio. Rising inventories relative to sales signal goods are piling up and production cuts are coming.
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Indicator B
ISM Manufacturing
Real-time ISM Manufacturing PMI tracking. Sub-50 readings signal manufacturing contraction and potential recession risk.
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