ISM Manufacturing Index: The Institute for Supply Management’s manufacturing index moved down 1.2% (m/m) to 49.0 for November 2022; this value is weaker than the forecast of 50.  The new orders sub-index scored at 47.2. Overall, the ISM manufacturing index is strong, while the global economy is beginning to strengthen again following shutdowns throughout Covid-19.

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 40.0 this month, while the inventories sub-index was 50.9.

Six manufacturing industries reported growth in November, in the following order: Apparel, Leather & Allied Products; Nonmetallic Mineral Products; Primary Metals; Miscellaneous Manufacturing; Petroleum & Coal Products; and Transportation Equipment. The 12 industries reporting contraction in November, in the following order, are: Printing & Related Support Activities; Wood Products; Paper Products; Textile Mills; Fabricated Metal Products; Furniture & Related Products; Chemical Products; Plastics & Rubber Products; Computer & Electronic Products; Food, Beverage & Tobacco Products; Machinery; and Electrical Equipment, Appliances & Components.

“General economic uncertainty has created a slowdown in orders as we approach the end of the year, and many of our key customers are reducing their capital expenditures spend.” [Machinery]

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.