ISM Manufacturing Index: The Institute for Supply Management’s manufacturing index moved down 1.2% (m/m) to 50.3 for February 2025; this value is stronger than the forecast of 50. The new orders sub-index scored at 48.6. The reading pointed to slower growth in the manufacturing sector as demand eased, production stabilized, and destaffing continued as companies experienced the first operational shock of the new administration’s tariff policy (Timothy Fiore, Chair of ISM).

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 46.8 this month, while the inventories sub-index was 49.9.

The 10 manufacturing industries reporting growth in February — listed in order — are: Petroleum & Coal Products; Miscellaneous Manufacturing; Primary Metals; Wood Products; Food, Beverage & Tobacco Products; Electrical Equipment, Appliances & Components; Chemical Products; Plastics & Rubber Products; Fabricated Metal Products; and Transportation Equipment. The five industries reporting contraction in February are: Furniture & Related Products; Textile Mills; Nonmetallic Mineral Products; Computer & Electronic Products; and Machinery.

“Business is still slow, but some indications of improved demand are six to nine months out. Steel and scrap costs are increasing, and it’s too early to tell how high they will go.” [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.