News

The S&P Global Flash U.S. Manufacturing PMI slipped from 53 to 52 in September, a two-month low. However, it remained above the 50-point marker that signals growth in business conditions. Factory production rose as new orders increased for a ninth straight month. On the other hand, weak sales growth led inventories to rise at an unprecedented rate to the largest buildup of finished goods inventories in the 18 years of the survey. Meanwhile, supplier delivery times in September lengthened to the greatest degree in four months. Manufacturers’ input cost inflation remained elevated at one of the fastest paces since the pandemic. Meanwhile, selling prices for goods cooled to the slowest rate since January as manufacturing firms reported difficulties passing higher costs on to customers due to weak demand and growing competition. Tariffs were again overwhelmingly cited as the principal cause of further cost increases in September.

Overall business activity slowed to a three-month low, falling from 54.6 in August to 53.6 in September. Despite the weaker pace of growth, the third quarter as a whole has seen the strongest average monthly expansion since the fourth quarter of 2024, with output growing for 32 consecutive months. The services sector drove the increase in business activity in September, while the manufacturing sector grew at a weaker rate than in August. Overall, new order growth slowed despite exports rising for the first time since March. As with manufacturing, prices increased but at the slowest pace since April.

Meanwhile, optimism about future business conditions improved in September, partly reflecting the anticipated beneficial impact of lower interest rates and despite continued fears regarding tariff policies and broader political uncertainty. Furthermore, respondents remain hopeful that tariffs could stimulate domestic production in the coming year.

Manufacturing activity in the Fifth District deteriorated in September, and at a faster pace than the previous month, with the composite manufacturing index dropping from -7 to -17. Meanwhile, the local business conditions index fell from 0 in August to -12 in September. Despite worsening conditions, manufacturers are less pessimistic about the future, with the outlook for future local business conditions rising from -10 in August to -1 in September. The Fifth Federal Reserve District consists of Virginia, Maryland, the Carolinas, the District of Columbia and most of West Virginia.

Among its components, shipments, new orders and employment all remained negative and contracted at a faster pace in September, dropping to -20, -15 and -15, respectively. The vendor lead time index stepped down from 11 in August to 10 in September. Meanwhile, the share of firms reporting backlogs worsened, falling from -12 to -21. The average growth rate of prices paid declined slightly, while growth in prices received increased in September.

Looking ahead, firms still expect both price indexes to rise in the next 12 months, with prices paid rising at a slower rate and prices received at a faster rate than forecasted in August. Expectations for future shipments decreased from 13 to 0, while new orders inched down from 9 to 8. Expectations for backlogs improved slightly, moving from -10 to -8. Meanwhile, firms’ expectations about equipment and software spending remained negative but improved to -9 from -18. Expectations for capital expenditures also stayed negative but stepped up to -11 from -15 in August. In sum, businesses in the Fifth District are slightly more optimistic about prospects for future growth, but they are still avoiding making new investment plans.

Manufacturing activity stepped up in the Tenth District in September, with the month-over-month composite index at 4, up 3 points from August. Meanwhile, expectations for future activity remained expansionary but softened, declining 4 points to 7. The Tenth Federal Reserve District encompasses the western third of Missouri; all of Kansas, Colorado, Nebraska, Oklahoma, and Wyoming; and the northern half of New Mexico. The month-over-month rise in activity was due to increases in durable manufacturing, while nondurable manufacturing activity slowed. New orders slowed, while production increased. Shipments ticked up, while new orders for exports decreased, but at a slower pace than the prior month.

Production increased from 0 to 4, while new orders decreased from 5 to 2. New export orders remained negative but rose from -15 to -9 over the month. Employment jumped in September, advancing from 0 to 7, and the average employee workweek remained unchanged at 3. The backlog of orders ticked up from -15 to -13. Both the pace of growth for prices received and paid eased month-over-month, with raw material prices falling from 43 to 40 and prices received decreasing 8 points to 13. Over the year, prices received rose at a slower pace, slipping 6 points to 55, while prices for raw materials stepped up from 69 to 74.

In September, survey respondents were asked about expectations for employment and product demand for 2026. The responses were mixed but mostly positive. Approximately 46% of firms expect their employment levels to be slightly higher by the end of 2026, while 2% of firms expect them to be significantly higher, and 35% expect no change. Meanwhile, 15% of firms expect employment levels will be slightly lower, while 2% expect they will be significantly lower. When firms were asked about demand for their products in 2026, half of the firms expect demand to be slightly higher in 2026, while 7% expect demand to be significantly higher. On the other hand, 20% of firms expect no change, 20% expect demand to be slightly lower and 3% expect it to be significantly lower.

Demand for U.S. durable goods bounced back in August following two months of declines, according to U.S. Census Bureau preliminary data out Thursday.

What’s going on: New orders for durable manufactured items rose $8.9 billion, or 2.9%, to $312.1 billion last month, led by a surge in transportation equipment.

• The figures come after a 2.7% July decrease in durable goods orders and a 9.3% decline in June.
• Excluding transportation, new orders went up 0.4%, and excluding defense, they rose 1.9%.
• Orders for transportation equipment, which tend to be volatile month to month, went up $8.1 billion, or 7.9%, to $110.2 billion after declining 9.4% in July.

Shipments and unfilled orders: In August, durable goods shipments inched down $0.5 billion, or 0.2%, to $307.5 billion, following a 1.6% increase in July.

• Unfilled orders, which have risen for 13 of the past 14 months, rose $9.6 billion last month, or 0.7%, to $1,479.0 billion after a flat July.

Inventories and capital goods: Inventories of durable goods ticked down in August, decreasing $0.1 billion, following 10 back-to-back monthly increases.

• Nondefense new orders for durable goods increased $4.6 billion, or 5.1%, to $95.0 billion in August. Shipments declined $0.7 billion, or 0.8%, to $89.2 billion.

In other economic news: Sales of pre-owned homes declined 0.2% in August, to a seasonally adjusted annual rate of 4.0 million units ( The Wall Street Journal, subscription).

• The median home price rose to $422,600, up 2% from August 2024 and the highest-ever price for August.

Late last week, the Advisory Committee for Immunization Practices, which advises the Centers for Disease Control on vaccine safety and efficacy, recommended changes to the childhood vaccine schedule.

What’s going on: ACIP voted on a recommendation that children age 4 and under no longer receive the combined measles-mumps-rubella-varicella vaccine but instead receive two separate shots: one to vaccinate against measles, mumps, and rubella, and a separate varicella (chickenpox) shot.

Why it matters: The Vaccines for Children Program, and other federal health programs such as Medicaid, use ACIP recommendations to determine vaccine coverage. The committee’s vote—assuming the CDC director approves the recommendation, which is expected—means that these programs likely will no longer cover the MMRV shot for children under the age of 4.

• The combined MMRV vaccine has been proven safe and effective, according to the CDC itself.
• The vote also means private health insurers are no longer required to cover these vaccines. However, America’s Health Insurance Plans (AHIP) said its members will continue coverage of these and other previously recommended vaccines through the end of 2026.

What’s next: Acting CDC Director Jim O’Neill must approve ACIP’s recommendations. In the past, CDC directors have almost always taken recommendations from ACIP.

• Some states, including California, Colorado, Oregon, Nevada, and Washington, have issued their own guidance in an attempt to maintain access to these vaccines.

The NAM says: “Vaccines have revolutionized public health, saved millions from serious and deadly illnesses, and insulated our economy from destabilizing epidemics,” said NAM Vice President of Domestic Policy Jake Kuhns. “Continued access to immunizations is important to help keep manufacturing workers and their families safe and healthy.”

Incidents of high-value “man in the middle” cyber fraud have risen in recent years, taking a financial toll on global shipping (BBC).

What’s going on: “This type of fraud involves a hacker being able to intercept the communication between two parties, such as emails. The criminal then impersonates both in order to try to steal [global shipping firms’] sensitive information, such as log-in details or financial data, or even to take control of a company’s computer system.”

• The number of attacks is increasing, having gone from 10 in 2021 to at least 64 in 2024, according to a research group at NHL Stenden University of Applied Sciences in the Netherlands.

Who’s doing it: “Many incidents are linked to the governments of four countries . . .  Russia, China, North Korea and Iran . . . Other attacks are purely for financial extortion, be it gangs from Nigeria or elsewhere.”

Why it’s important: “Law firm HFW’s data shows that such hacking is a growing problem for the shipping sector, both attacks on ships and ports. It says that between 2022 and 2023 the cost of dealing with an attack doubled to an average of $550,000.”

• In those cases where the firms are unable to get rid of the cyber criminals and are forced to pay them, “HFW says the average cost of a ransom payment is now $3.2 million.”

A big target: About 80% of the world’s trade travels by ocean, and disruptions caused by hackers can make shipping firms’ costs increase enormously, “leav[ing] them short of capacity.”

Why it’s on the rise: The shipping industry’s increasing digitalization means “there are now simply more routes for hackers to use . . . while new communication technologies, Elon Musk’s Starlink satellite service, for example, have meant that ships have become more connected to the outside world. And therefore more hackable.”

• Compounding the problem is that adoption of digital technologies in the sector often happens in “a piecemeal way, and involves technology that can go rapidly out of date”—in large part because firms can’t afford to have their ships out of commission long enough for updates.
• Also, sensors used by ships to monitor emissions transmit data hackers can often access.

How it’s being addressed: “Ship management systems are now required—rather than simply advised— to include increasingly stringent cyber security measures, ranging from basic security hygiene to more technical operational and IT measures.”

NAM in action: The NAM supports legislation to crack down on supply chain theft and fraud and is working with industry partners to highlight the growing issue for policymakers.

The Manufacturing Institute, the 501(c)3 workforce development and education affiliate of the National Association of Manufacturers, announced that Amatrol will be an official sponsor of the Federation for Advanced Manufacturing Education USA.

The background: FAME USA, an initiative founded by Toyota and now run by the MI, is the premier American model of manufacturing skills training, developing highly skilled, professional and sought-after talent to meet the unique needs and challenges of modern manufacturing.

• Amatrol is a globally recognized leader in technical education, providing critical certification, training equipment and continuing education materials to educational institutions and manufacturers.

The partnership: Amatrol is now the exclusive FAME training equipment and content sponsor for the advanced manufacturing, industrial maintenance and smart manufacturing space.

• Together, the two institutions will advance workforce readiness and upskilling as the sector embraces artificial intelligence and the Manufacturing 4.0 revolution.
• Amatrol will continue its Diamond Sponsorship of the FAME National Conference while extending its support to the MI’s Workforce Summit as a Gold Sponsor.

The MI says: “The Manufacturing Institute’s mission is building and strengthening the manufacturing workforce, and FAME USA is a key part of fulfilling that mission. Manufacturers will need to fill 3.8 million jobs by 2033, and half of those are expected to go unfilled because we don’t have the people with the right skills,” said MI President and Executive Director Carolyn Lee.

• “Through the partnership with Amatrol, we’re creating a clear pathway for FAME USA chapters to access top-tier training resources—whether ensuring new chapters start with great equipment from day one, or giving existing chapters the opportunity to strengthen and expand their training programs as needs evolve.”

“Most importantly, this will allow us to work more cohesively with instructors throughout the FAME initiative and help them be more successful,” said Amatrol President Paul Perkins.

The Commerce Department published a FRN today indicating it opened an investigation on September 2 “to determine the effects on the national security of imports of robotics and industrial machinery.”

A wide scope: The NAM’s back-of-the-envelope calculation finds that this could affect some half a trillion dollars in manufacturing equipment and inputs, the largest 232 investigation to date.

• The FRN cites examples of products in the scope of investigation, including robots, programmable computer-controlled mechanical systems, CNC machining centers, turning and milling machines, grinding and deburring equipment, and industrial stamping and pressing machines.

Timing: Public comments are due in 21 days, or by October 17.

A twist: In addition to comments on the role of foreign supply chains in meeting U.S. demand for such products, this FRN probes for impacts on employment from use of robotics and the ability of foreign actors to weaponize foreign-built robotics and machinery.

• Please thoroughly read the lengthy list of criteria for consideration of tariffs on these products as you develop company-specific comments.

What’s next: The NAM team will solicit specific input as it develops its submission, but you are welcome to start sending insights, ideas and data to NAM Vice President of International Economic Policy Andrea Durkin immediately.

Another FRN: Commerce also published a second FRN today indicating that it opened an investigation on September 2 to determine the effects on national security of imports of personal protective equipment, medical consumables and medical equipment including devices.

• The FRN cites examples of products in the scope of this investigation, including respirators, syringes, infusion pumps, medical supplies common in all hospitals, diagnostic and laboratory reagents and durable patient equipment such as wheelchairs, and medical devices, including those used to diagnose, monitor and treat patients such as coronary stents, insulin pumps, blood glucose monitors, MRI machines and more.

Timing: Public comments are again due in 21 days, or October 17.

Get in touch: The NAM team will solicit input on this FRN as it develops a submission, but again your ideas and insights are welcome as soon as possible. Please contact Senior Director of International Policy Anne Collett.

The NAM says: “Manufacturers are working to increase capacity in the United States—and domestic production of robotics and industrial machinery can enhance both our industrial might and our national security. However, tariffs on critical manufacturing inputs would significantly increase costs on equipment and machinery on factory floors across the country, which could in turn stall investment in new plants and equipment right here at home at a time manufacturers want to help President Trump create more U.S. manufacturing output and jobs,” NAM President and CEO Jay Timmons said in a public statement.

• “The challenge facing the United States today is that our domestic industry can produce at most 84% of the inputs manufacturers need to build, modernize and operate our facilities and to increase production and output. That is true even if every manufacturer in the country is working at full capacity.”
• “That means that, at an absolute minimum, 16% of critical manufacturing inputs must be imported to manufacture more here in the U.S. That’s why manufacturers have offered practical pro-growth solutions to bring in these essential inputs without adding cost burdens, while rewarding manufacturers that invest, expand and create new jobs at home.”

Global nuclear operational capacity will increase more than 100% in the next 25 years, according to new International Atomic Energy Agency projections.

What’s going on: “For the fifth year in a row, the [IAEA] has revised up its projections for the expansion of nuclear power, as global momentum continues to build behind this clean and secure source of energy.”

• By 2050, capacity will reach 2.6 times its 2024 level, “with small modular reactors (SMRs) expected to play a pivotal role in this expansion.”
• The projections—which include all “operating reactors, possible license renewals, planned shutdowns, power uprates to increase output levels and plausible and ongoing construction projects foreseen for the next few decades”— are included in the IAEA’s annual report, released earlier this month at the 69th IAEA General Conference in Vienna.

The current state: By the end of last year, there were 417 nuclear power reactors in operation worldwide, with a capacity of 377 gigawatts electric.

• In the low-case projection, nuclear electrical-generating capacity is expected to increase to 992 GW(e), while in the high-case projection, it’s slated to go up to 561 GW(e).

Why it’s important: “As a clean, safe and abundant energy source, nuclear is a key piece of the successful all-of-the-above strategy the U.S. needs to meet growing energy demand that will power growth in domestic advanced manufacturing,” said NAM Director of Energy and Resources Policy Michael Davin.

Real GDP grew at an annual rate of 3.8% in the second quarter, according to the third and last estimate released by the Bureau of Economic Analysis. This represents a 0.5 percentage point increase from the second estimate of 3.3% and 0.8 percentage point jump from the first estimate of 3.0%.

• Meanwhile, the revised estimate for the first quarter showed real GDP decreased 0.6%, down 0.1 percentage point from the previous estimate of -0.5%.

What’s behind it: The upward revision of GDP in Q2 primarily reflects higher consumer spending.

• “Real final sales to private domestic purchasers, the sum of consumer spending and gross private fixed investment, increased 2.9% in the second quarter, revised up 1.0 percentage point from the previous estimate,” the BEA reported.

What it means for manufacturers: “The upward revisions to consumer spending and business investment in the second quarter are positive signs, given that manufacturers’ optimism and every forecasted metric in the latest NAM Manufacturers’ Outlook Survey increased notably in the third quarter,” said NAM Chief Economist Victoria Bloom.

• “Although investment in equipment picked up, spending on structures, which represent factories and infrastructure, contracted 7.5% in the second quarter amid an environment of heightened uncertainty.”