ISM Manufacturing Index
ISM Manufacturing Index: The Institute of Supply Management’s Manufacturing Index moved down 2.0 points on the month (m/m) to 58.7 for January 2021; this value is stronger than the forecast of 50. The index has been higher than 55 for six consecutive months (expansion = 50+). The new orders sub-index scored a 61.1. Overall, the ISM manufacturing index is strong, while fundamentals remain unfavorable as the global economy weakens.
The ISM manufacturing index is based on surveys of 300 purchasing managers in 20 industries. The survey is a diffusion index calculated as a percent of responses. A value of 50 is neutral, while less than 50 is contracting and greater than 50 is expansionary.
Figure 1 breaks down the detail of the composite index and sub-indexes. The composite index score for January was 58.7. One year ago, the composite index was strong at 50.9.
Of the 18 manufacturing industries, 16 reported growth in January, in the following order: Electrical Equipment, Appliances & Components; Machinery; Primary Metals; Chemical Products; Fabricated Metal Products; Plastics & Rubber Products; Transportation Equipment; Apparel, Leather & Allied Products; Paper Products; Wood Products; Food, Beverage & Tobacco Products; Nonmetallic Mineral Products; Furniture & Related Products; Miscellaneous Manufacturing; Textile Mills; and Computer & Electronic Products. The two industries reporting contraction in January are: Printing & Related Support Activities; and Petroleum & Coal Products
An Institute for Supply Management respondent stated, “Our current business demand is going way past pre-COVID-19 [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 US manufacturing.