Economic activity in the manufacturing sector expanded in September for the ninth consecutive month, according to the latest ISM Manufacturing PMI Report, released on October 1.

The Manufacturing PMI registered 54.5% in September, 0.1 percentage point below the August figure of 54.6%.

The overall economy continued in expansion for the 23rd month in a row. 

Index Readings

Supplier Deliveries Index indicated slowing performance for the 10th month in a row after one month in 'faster' territory. The reading of 59% is down 0.3 percentage point from its August reading of 59.3%. 

Inventories Index registered 48.6%, down 2 percentage points compared to August's reading of 50.6%.

Customers' Inventories Index reading of 41.6% is 1.2 percentage points lower compared to the 42.8% recorded in August.

New Export Orders Index lost 2.3 percentage points in September for a reading of 50.9% versus 53.2% in August.

Imports Index registered 51%, a decrease of 1.5 percentage points compared to August's reading of 52.5%.

New Orders Index expanded for the ninth consecutive month after four straight readings in contraction, registering 55.3%, up 1.6 percentage points compared to August's figure of 53.7%. 

Production Index registered 56.7% which is 1.6 percentage points lower than the 58.3% recorded in August.

Prices Index remained in expansion territory, registering 77.9%, a notable increase of 6.8 percentage points compared to August's reading of 71.1%

Backlog of Orders Index registered 56.4%, up 4.6 percentage points compared to the 51.8%recorded in August.

Employment Index reading of 52.7% is up 1.5 percentage points from August's figure of 51.2%.

What Respondents are Saying

"Better performance was driven primarily by temporary market effects, including (1) geopolitical uncertainties, (2) customers bringing forward purchases, (3) delayed raw material price increases and (4) reduced competitor capacity. However, these factors do not signal sustained recovery: Structural challenges facing the chemical industry remain, including overcapacity, persistent pricing pressures and protectionist trade policies." [Chemical Products]

"Supply chain performance has improved compared to prior years, with lead times largely normalized. Cost pressures persist in select raw materials, transportation and labor categories, requiring continued focus on supplier management and cost control. We remain cautiously optimistic about business conditions over the next several quarters." [Chemical Products]

"The U.S. tariff schedule is providing challenges. Finding alternate sources of supply outside of China, local pushback on data centers in the U.S. and continuing material/component shortages are affecting business." [Computer & Electronic Products]

"Manufacturing activity remains stable, with a continued focus on cost optimization, supplier negotiations and supply base consolidation. We are actively evaluating alternative sources in several categories to improve supply resilience and reduce costs. While material availability has generally improved compared to prior periods, qualification requirements and supplier capacity constraints continue to influence sourcing decisions for certain critical materials and components. Capital and operational spending remain focused on productivity, efficiency and transformation initiatives." [Computer & Electronic Products]

"Orders have doubled yet again, and delivery times have also doubled, in the semiconductor, electronics and government sectors, with remaining sectors flat to down. Coupled with supply chain lead times and pricing pressures, the factory backlog has nearly doubled. Canada tariffs have impacted cross-border costs and left our supply chain team scrambling — those supply chains took years to develop and nurture — hurting the very lead times government buyers are concerned about." [Machinery]

"Order levels remain strong and elevated; we have orders through year-end at above forecast levels. Our biggest challenge continues to be a severe shortage of workers, limiting our production output to meet demand. The second challenge is general availability of steel; the market is getting worse, and more production delays are expected as we gap out of needed material." [Fabricated Metal Products]

"Raw metals continue to be challenging, especially with the uncertain nature of tariffs being on and off again. New tariffs against Canada have drastically increased costs for capital expenses as well as assemblies." [Electrical Equipment, Appliances & Components]

"Fuel costs are still affecting transportation costs and the overall cost of goods. Beef costs remain high, with no relief in sight." [Food, Beverage & Tobacco Products]

"Higher interest rates slow down the growth of new construction projects; we also have to face up to the higher cost of components from overseas due to tariffs and freight rates. Due to booming demand of AI and data centers, domestic steel capacity has been stretched and pushed. Higher steel costs each month increase our raw-material and finished-goods costs." [Machinery]

"Every month, we are faced with new headwinds created by this administration. This month, it is the trade war with Canada, which every day is getting worse — causing prices to go up and uncertainty that creates massive disruption. Buying continues to get pushed out indefinitely as customers don't want to spend on capital expenditures until there is more certainty of costs and demand. The only thing that is predictable is the chaos that is created by these trade policies." [Transportation Equipment]