ISM Non-Manufacturing Index: The Institute for Supply Management’s non-manufacturing index decreased by 3.4 points month on month (-5.7% m/m) to 56.5 in February 2022.

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 high this month at 55.1, while the imports sub-index was 51.7.

The 14 services industries reporting growth in February — listed in order — are: Construction; Transportation & Warehousing; Educational Services; Management of Companies & Support Services; Wholesale Trade; Mining; Utilities; Health Care & Social Assistance; Finance & Insurance; Professional, Scientific & Technical Services; Public Administration; Retail Trade; Information; and Other Services. The four industries reporting a decrease in February are: Real Estate, Rental & Leasing; Arts, Entertainment & Recreation; Agriculture, Forestry, Fishing & Hunting; and Accommodation & Food Services.

“We are getting price increases with no notice. For example, our engineered wood products supplier gave us a 10 percent to 20 percent (based on SKU) increase, effective immediately. We are also struggling to get materials. Suppliers cite poor employee attendance, elevated employee turnover and positions open longer than normal as they struggle to fill them.” [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.