ISM Non-Manufacturing Index: The Institute for Supply Management’s non-manufacturing composite index increased by 4.0 points month on month (+6.7% m/m) to 64.1 in July 2021. The new orders sub-index scored a 63.7.

The ISM non-manufacturing survey measures the rate and direction of change in activity in non-manufacturing industries. Surveys are sent to more than 400 purchasing managers in 17 industries. Survey responses reflect the change in the current month compared with the previous month. A value of 50 is neutral, while less than 50 denotes contracting non-manufacturing activity and greater than 50 denotes expanding activity.

Figure 1 breaks down the composite index and sub-indexes. The business activity sub-index was highest this month at 67.0, while the inventories sub-index was lowest at 49.2

The 17 services industries reporting growth in July — listed in order — are: Arts, Entertainment & Recreation; Wholesale Trade; Accommodation & Food Services; Management of Companies & Support Services; Retail Trade; Real Estate, Rental & Leasing; Transportation & Warehousing; Information; Other Services; Public Administration; Construction; Health Care & Social Assistance; Utilities; Professional, Scientific & Technical Services; Educational Services; Finance & Insurance; and Mining. No industry reported a decrease in July.

“Costs have risen dramatically in the last 45 days. Lodging, fuel, travel, and supplies are all rising sharply. Costs for available labor are also rising, as demand increases in a diminished labor pool.” [Construction]

At Gerdau, we closely monitor the ISM non-manufacturing index since it is an excellent barometer of the present strength, as well as a window on the likely short-run future, of the U.S. non-manufacturing economy. We have seen that a strengthening non-manufacturing economy translates to improved steel consumption.