ISM Manufacturing Index: The Institute for Supply Management’s manufacturing index moved up +2.5% (m/m) to 50.3 for March 2024; this value is stronger than the forecast of 50. The new orders sub-index scored at 51.4. This marked the first expansion in the manufacturing sector after 16 months of contraction.

The ISM manufacturing index is based on surveys of 300 purchasing managers in 17 industries. The survey is a diffusion index calculated as a percent of responses. A value of 50 is neutral, while less than 50 denotes contracting manufacturing activity and greater than 50 denotes expanding activity.

Figure 1 breaks down the composite index and sub-indexes. The backlogs sub-index was 46.3 this month, while the inventories sub-index was 48.2.

The nine manufacturing industries reporting growth in March — in order — are: Textile Mills; Nonmetallic Mineral Products; Paper Products; Petroleum & Coal Products; Primary Metals; Food, Beverage & Tobacco Products; Fabricated Metal Products; Chemical Products; and Transportation Equipment. The six industries reporting contraction in March — in the following order — are: Furniture & Related Products; Plastics & Rubber Products; Electrical Equipment, Appliances & Components; Machinery; Computer & Electronic Products; and Miscellaneous Manufacturing.

“Continue to experience a softness in the industrial sector. There is optimism that order activity will increase in the late second quarter, leading to improvement in this segment for the second half of the year. The aerospace and defense market is continuing to ramp up, and demand is outpacing supply in our supply chain.” [Primary Metals]

At Gerdau, we closely monitor the ISM manufacturing index since it is an excellent barometer of the present strength, as well as a window on the likely short-run future, of U.S. manufacturing.