ISM Manufacturing Index:  The Institute for Supply Management’s manufacturing index moved down 0.7% (m/m) to 46.5 for October 2024; this value is weaker than the forecast of 50. The new orders sub-index scored at 47.1. The reading pointed to another contraction in the manufacturing sector and the lowest since July 2023, as demand continues to be weak, output declined, and inputs stayed accommodative.

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 42.3 this month, while the inventories sub-index was 42.6.

The five manufacturing industries reporting growth in October are: Apparel, Leather & Allied Products; Food, Beverage & Tobacco Products; Petroleum & Coal Products; Computer & Electronic Products; and Miscellaneous Manufacturing. The 11 industries reporting contraction in October — in the following order — are: Textile Mills; Printing & Related Support Activities; Transportation Equipment; Chemical Products; Electrical Equipment, Appliances & Components; Machinery; Primary Metals; Nonmetallic Mineral Products; Plastics & Rubber Products; Fabricated Metal Products; and Paper Products.

“Business levels remain depressed. It feels like a ‘wait and see’ environment regarding where the economy is heading; customers don't want to commit to inventory, which is resulting in lower order levels.” [Fabricated Metal Products]

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.