ISM Non-Manufacturing Index: The Institute for Supply Management’s non-manufacturing index increased by 0.7 points month on month (1.4% m/m) to 51.9 in April 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.

Figure 1 breaks down the composite index and sub-indexes. The business activity sub-index was high this month at 52.0, while the imports sub-index was 51.3.

The 14 services industries reporting growth in April — listed in order — are: Arts, Entertainment & Recreation; Other Services; Real Estate, Rental & Leasing; Accommodation & Food Services; Utilities; Public Administration; Transportation & Warehousing; Professional, Scientific & Technical Services; Educational Services; Health Care & Social Assistance; Retail Trade; Construction; Finance & Insurance; and Information. The three industries reporting a decrease in the month of April are: Mining; Agriculture, Forestry, Fishing & Hunting; and Wholesale Trade.

“High mortgage rates continue to weigh on new residential construction. With demand down, material suppliers are curtailing production to maintain pricing levels. Labor continues to be constrained, but some negotiation room is developing as the slowdown drags on.” [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.