ISM Manufacturing Index: The Institute for Supply Management’s manufacturing index moved down 1.5 points month on month (m/m) to 57.1 for March 2022; this value is stronger than the forecast of 50.  The new orders sub-index scored a 53.8. Overall, the ISM manufacturing index is strong, while the global economy is beginning to strengthen again following shutdowns throughout Covid-19.

The ISM manufacturing index is based on surveys of 300 purchasing managers in 17 industries. The survey is a diffusion index calculated as a percent of responses. A value of 50 is neutral, while less than 50 denotes contracting manufacturing activity and greater than 50 denotes expanding activity.

Figure 1 breaks down the composite index and sub-indexes. The backlogs sub-index was 60.0 this month, while the inventories sub-index was 55.5.

Fifteen manufacturing industries reported growth in March, in the following order: Apparel, Leather & Allied Products; Furniture & Related Products; Food, Beverage & Tobacco Products; Electrical Equipment, Appliances & Components; Miscellaneous Manufacturing; Machinery; Textile Mills; Transportation Equipment; Fabricated Metal Products; Paper Products; Chemical Products; Computer & Electronic Products; Nonmetallic Mineral Products; Primary Metals; and Plastics & Rubber Products. The two industries reporting a decrease in March compared to February are: Wood Products; and Petroleum & Coal Products.

“Backlog continues to be strong as we ship delinquent orders resulting from COVID-19 slowdowns.” [Fabricated Metal Products]

At Gerdau, we closely monitor the ISM manufacturing index since it is an excellent barometer of the present strength, as well as a window on the likely short-run future, of U.S. manufacturing.