ISM Manufacturing Index:  The Institute for Supply Management’s manufacturing index moved down 0.3 points month on month (m/m) to 60.8 for October 2021; this value is stronger than the forecast of 50. The new orders sub-index scored a 59.8 while the imports sub-index scored a 49.1. Both values took a 10% drop in October. Regarding new orders, ISM said, “The drop in new orders could be tied to supply managers waiting to see if prices retreat in coming weeks. There were tentative signs of prices declining, notably for steel.” 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 63.6 this month, while the inventories sub-index was 57.0.

The 16 manufacturing industries reporting growth in October — in the following order — are: Apparel, Leather & Allied Products; Furniture & Related Products; Textile Mills; Electrical Equipment, Appliances & Components; Machinery; Printing & Related Support Activities; Food, Beverage & Tobacco Products; Computer & Electronic Products; Chemical Products; Fabricated Metal Products; Miscellaneous Manufacturing; Petroleum & Coal Products; Plastics & Rubber Products; Paper Products; Primary Metals; and Transportation Equipment. The two industries reporting a decrease in October compared to September are Wood Products and Nonmetallic Mineral Products.

“Domestic original equipment manufacturer (OEM) capital-expenditure spending is trending up for our business. We are seeing an increase of capital equipment with life spans of more than 10 years in the fourth quarter.” [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.