ISM Non-Manufacturing Index

ISM Non-Manufacturing Index: The Institute for Supply Management’s non-manufacturing composite index decreased by 1.2 points month-over-month, (-2.1% m/m,) to 56.9 in August 2020.

The ISM nonmanufacturing survey measures the rate and direction of change in activity in nonmanufacturing industries. Surveys are sent to more than 400 purchasing managers in 19 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 is contracting and greater than 50 is expansionary.

Figure 1 breaks down the details in month-over-month, 3MMA (three-month moving average) % change year-over-year, and 12MMA % change y/y comparisons. The business activity moved down 4.8 points to 62.4, down 7.1% m/m. The new order sub-index moved down 10.9 points to 56.8 in August. The employment sub-index came in at 47.9, up 5.8 points m/m. Imports sub-index moved up 4.5 points to 50.8, and exports sub-index came in at 55.8, up 6.5 points m/m.

The 15 services industries reporting growth in August — listed in order — are: Arts, Entertainment & Recreation; Health Care & Social Assistance; Utilities; Accommodation & Food Services; Transportation & Warehousing; Wholesale Trade; Construction; Retail Trade; Management of Companies & Support Services; Public Administration; Finance & Insurance; Educational Services; Agriculture, Forestry, Fishing & Hunting; Real Estate, Rental & Leasing; and Professional, Scientific & Technical Services. The three industries reporting a decrease in August are: Mining; Information; and Other Services.

An Institute for Supply Management respondent stated, “Overall, we are seeing improvement in the level of activity in the short term. Backlog of orders is inconsistent.” (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 US nonmanufacturing economy. We have seen that a strengthening nonmanufacturing economy translates to improved steel consumption.

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