ISM Non-Manufacturing Index: The Institute for Supply Management’s non-manufacturing composite index decreased by 0.5 points month on month, (0.6% MoM) to 55.5 in January.

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 on month, 3MMA, (three-month moving average) year on year, 12MMA y/y and momentum comparisons. The business activity moved up 2.1 points to 60.9, up 6.5% MoM. The new order sub-index moved up 0.9 points to 56.2 in January and was up 2.4% MoM. The employment sub-index came in at 53.1, down 1.7 points m/m. Imports sub-index moved up 7.1 points to 55.1, and exports sub-index came in at 50.1, down 0.9 points m/m.

Figure 2 shows the history of the ISM nonmanufacturing index from 2010 to present. The index has been consistently in the expansionary zone since 2010.

The 12 non-manufacturing industries reporting growth in January — listed in order — are: Agriculture, Forestry, Fishing & Hunting; Management of Companies & Support Services; Health Care & Social Assistance; Educational Services; Utilities; Accommodation & Food Services; Finance & Insurance; Retail Trade; Construction; Public Administration; Information; and Professional, Scientific & Technical Services. The six industries reporting a decrease in January — listed in order — are: Transportation & Warehousing; Wholesale Trade; Other Services; Arts, Entertainment & Recreation; Mining; and Real Estate, Rental & Leasing.

An Institute for Supply Management respondent stated, “Q1 sales are improving, which makes us more optimistic.” (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.