ISM Manufacturing Index: The Institute for Supply Management’s manufacturing index moved down 0.6% (m/m) to 48.4 for December 2022; this value is weaker than the forecast of 50. The new orders sub-index scored at 45.2. The ISM manufacturing index is on its second month of contraction in factory activity as Americans are shifting spending away from goods to services.

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 41.4 this month, while the inventories sub-index was 51.8.

The two manufacturing industries that reported growth in December are: Primary Metals; and Petroleum & Coal Products. The 13 industries reporting contraction in December, in the following order, are: Wood Products; Fabricated Metal Products; Chemical Products; Paper Products; Plastics & Rubber Products; Electrical Equipment, Appliances & Components; Furniture & Related Products; Apparel, Leather & Allied Products; Computer & Electronic Products; Machinery; Food, Beverage & Tobacco Products; Transportation Equipment; and Miscellaneous Manufacturing.

“Finished the year strong, and we are pleased with how the year shaped up.” [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.