Manufacturing Expands for Ninth Consecutive Month
In September, the U.S. manufacturing sector expanded for the ninth consecutive month and at roughly the same pace, with the ISM Manufacturing® PMI edging down to 54.5% from 54.6% in August. Demand indicators, such as the New Orders, Backlog of Orders and New Export Orders indices, stayed in expansion territory. Meanwhile, the Customers’ Inventories Index remained in “too low” territory and contracted at a faster pace, a positive sign for future production, falling 1.2 percentage points to 41.6%. At the same time, the Production Index expanded at a slower pace in September, dropping from 58.3% to 56.7%.
The New Orders Index expanded for the ninth straight month in September and at a faster pace, rising 1.6 percentage points from August to 55.3%. Of the six largest manufacturing sectors, five—machinery; transportation equipment; chemical products; food, beverage and tobacco products; and computer and electronic products—reported an increase in new orders. Optimism about near-term demand dipped but remained positive, with 1.7 positive comments for every negative comment.
The New Export Orders Index expanded for the third consecutive month in September but at a slower rate, dropping 2.3 percentage points to 50.9%. Respondents remained concerned about trade and war frictions, but less so than prior months, with 1.2 positive comments for every negative comment. Meanwhile, the Imports Index expanded for the eighth consecutive month but at a slower pace, down 1.5 percentage points from August to 51.0%.
The Employment Index expanded for the third consecutive month and at a faster pace, climbing 1.5 percentage points from August to 52.7%. Of the six largest manufacturing sectors, two—transportation equipment and computer and electronic products—reported increased employment. For every comment about reducing headcounts, 1.5 respondents noted hiring.
The Prices Index jumped 6.8 percentage points in September to 77.9%, indicating raw materials prices grew for the 24th straight month and at a much faster pace than the prior month. All six of the largest manufacturing sectors reported increased prices. The increase continued to be driven by higher steel and aluminum costs throughout the supply chain, tariffs applied to most imported goods and increases in petroleum-based products amid the Middle East conflict. Roughly 58.6% of companies reported paying higher prices, up from 46.2% in August and 21.0% in January 2025.
