ISM Non-Manufacturing Index: The Institute for Supply Management’s non-manufacturing composite index decreased by 0.8 points month on month, (-1.5% MoM) to 53.9 in November.
The ISM nonmanufacturing survey measures the rate and direction of change in activity in nonmanufacturing industries. Surveys are sent to more than 370 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 is contracting and greater than 50 is expansionary.
Figure 1 breaks down the details in month on month, 3MMA, (three-month moving average) year on year, 12MMA y/y and momentum comparisons. The business activity moved down 5.4 points to 51.6, down 9.5% MoM. The new order sub-index moved-up 1.5 points to 57.1 in November and was down 2.7% MoM. The employment sub-index came in at 55.5, up 1.8 points m/m. Imports sub-index moved down 3.5 points to 45, and exports sub-index came in at 52, up 2 points m/m.
Figure 2 shows the history of the ISM nonmanufacturing index from 2003 to present. The index has been in the expansionary zone since the great recession ended.
The 12 non-manufacturing industries reporting growth in November — listed in order — are: Real Estate, Rental & Leasing; Health Care & Social Assistance; Arts, Entertainment & Recreation; Accommodation & Food Services; Retail Trade; Finance & Insurance; Transportation & Warehousing; Management of Companies & Support Services; Information; Utilities; Professional, Scientific & Technical Services; and Public Administration. The five industries reporting a decrease are: Agriculture, Forestry, Fishing & Hunting; Mining; Wholesale Trade; Construction; and Other Services.
An Institute for Supply Management respondent stated, “Activity is still up in all areas, but primarily in commercial construction.” (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.