ISM Non-Manufacturing Index

ISM Non-Manufacturing Index: The Institute for Supply Management’s non-manufacturing index decreased by 3.9 points month on month (7.1% m/m) to 51.2 in March 2023.

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 18 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.

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Figure 1 breaks down the composite index and sub-indexes. The business activity sub-index was high this month at 55.4, while the imports sub-index was 43.6.

The 13 services industries reporting growth in March — listed in order — are: Other Services; Arts, Entertainment & Recreation; Educational Services; Accommodation & Food Services; Public Administration; Mining; Management of Companies & Support Services; Agriculture, Forestry, Fishing & Hunting; Professional, Scientific & Technical Services; Utilities; Health Care & Social Assistance; Construction; and Information. The five industries reporting a decrease in the month of March are: Finance & Insurance; Wholesale Trade; Real Estate, Rental & Leasing; Transportation & Warehousing; and Retail Trade.

“Sales continue to increase even as interest rates moderately increase. Most suppliers feel their supply chains are back to normal, with inventories climbing and delivery times improving. (We) fear this will have a detrimental effect in a six- to 12-month time frame.” [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.

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