ISM Non-Manufacturing Index: The Institute for Supply Management’s non-manufacturing index increased by 3.4 points month on month (+6.6% m/m) to 54.9 in September 2024.

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 59.9, while the imports sub-index was 52.7.

The 12 services industries reporting growth in September — listed in order — are: Real Estate, Rental & Leasing; Management of Companies & Support Services; Accommodation & Food Services; Mining; Public Administration; Health Care & Social Assistance; Finance & Insurance; Construction; Transportation & Warehousing; Information; Educational Services; and Utilities. The five industries reporting a contraction in the month of September are: Other Services; Agriculture, Forestry, Fishing & Hunting; Wholesale Trade; Professional, Scientific & Technical Services; and Retail Trade.

“Housing construction continues to struggle with high interest rates. While the recent half-point cut is encouraging, it may take another 150 basis points to move the needle in sales. Labor and heating, ventilation and air conditioning (HVAC) regulations continue to be a drag on construction last month.” [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.