Business

U.S. Manufacturing Expands as Factory Prices Surge

October 2, 2026

U.S. manufacturing remained in expansion territory in September, with the Institute for Supply Management’s Manufacturing PMI registering 54.5. The reading was nearly unchanged from August’s 54.6 and marked a ninth consecutive month of manufacturing-sector growth.

Price pressures showed a much sharper move. The Prices Index climbed to 77.9 from 71.1 in August, while new orders and employment also strengthened during the month.

Key Takeaways

The U.S. Manufacturing PMI registered 54.5 in September, compared with 54.6 in August
Manufacturing expanded for a ninth consecutive month
The Prices Index jumped to 77.9 from 71.1
The New Orders Index increased to 55.3 from 53.7
The Employment Index rose to 52.7 from 51.2

U.S. Manufacturing PMI Remains in Expansion Territory

The September reading kept the U.S. manufacturing sector in expansion territory, with the Manufacturing PMI registering 54.5. That was just 0.1 percentage point below the August reading of 54.6.

A Manufacturing PMI above 50 generally indicates expansion in the sector, while a reading below 50 indicates contraction. September therefore marked a ninth consecutive month of manufacturing growth following a 10-month period of contraction.

Several underlying measures also remained in expansion. New orders and employment strengthened from August, while production registered 56.7 despite declining from the previous month’s 58.3.

The results continue a broader period of factory growth visible in other manufacturing surveys. Earlier data on factory output and employment showed production and orders strengthening in June even as employment conditions weakened at the time.

September’s headline PMI changed little from August, but the composition of the report shifted. Inventories moved into contraction, while new orders, employment and backlogs strengthened and input-price pressures accelerated.

Factory Prices Index Rises Sharply in September

The ISM Prices Index increased to 77.9 in September from 71.1 in August, a 6.8-point jump. The index measures whether manufacturers are reporting higher or lower prices for raw materials and other inputs.

September marked the 24th consecutive month in which the Prices Index indicated rising raw-material costs. The increase was also considerably larger than the movement in the headline Manufacturing PMI, which slipped by only 0.1 point.

ISM reported that 58.6% of respondents experienced higher prices in September, compared with 46.2% in August. Only 2.8% reported lower prices.

Steel, aluminum, copper, fuel, electronic components, semiconductors and other materials were among the commodities reported as increasing in price during the month. ISM also identified tariffs and higher petroleum-related costs as factors contributing to price conditions.

The manufacturing price measure is separate from broader producer and consumer inflation indexes, but recent August producer-price data also showed higher prices across final demand and several intermediate stages of production.

For manufacturers, higher input costs can influence procurement decisions, production expenses and pricing calculations. The ISM index measures the direction and breadth of those changes rather than the exact percentage increase in manufacturers’ costs.

New Orders Strengthen Across the Manufacturing Sector

The New Orders Index increased to 55.3 in September from 53.7 in August, remaining above the 50 threshold associated with expansion.

The August reading had fallen from 56.7 in July, meaning September’s 1.6-point increase recovered part of the previous month’s decline.

Among the six largest manufacturing industries tracked by ISM, five reported higher new orders: Computer & Electronic Products, Chemical Products, Transportation Equipment, Food, Beverage & Tobacco Products, and Machinery.

Backlogs also strengthened. The Backlog of Orders Index rose to 56.4 from 51.8 in August, a 4.6-point increase that indicated a faster expansion in orders received but not yet completed.

Production remained firmly in expansion territory at 56.7, although the index fell 1.6 points from August’s 58.3.

Together, the new-orders and production readings showed continued factory demand and output growth even as manufacturers faced higher input prices.

Factory Employment Moves Further Into Expansion

The ISM Employment Index increased to 52.7 in September from 51.2 in August, moving further into expansion territory.

August’s employment reading had declined from 52.8 in July. September’s 1.5-point increase therefore returned the index close to its July level.

Eight of the 18 manufacturing industries tracked by ISM reported employment growth during September. These included Electrical Equipment, Appliances & Components; Primary Metals; Wood Products; Computer & Electronic Products; Miscellaneous Manufacturing; Plastics & Rubber Products; Transportation Equipment; and Fabricated Metal Products.

ISM also reported that comments from survey participants showed a 1.5-to-1 ratio of hiring activity to managing or reducing headcounts.

The employment measure is one of five seasonally adjusted indexes used directly in calculating the Manufacturing PMI, along with New Orders, Production, Supplier Deliveries and Inventories.

The index reflects responses from manufacturing purchasing and supply executives about employment conditions within their organizations. It provides a sector-specific signal and is separate from the federal government’s broader payroll and employment statistics.

September Report Shows Growth Alongside Higher Costs

September’s manufacturing report combined continued expansion with considerably stronger input-price pressure.

The Manufacturing PMI registered 54.5, New Orders increased to 55.3 and Employment reached 52.7. Production remained in expansion at 56.7, while the Backlog of Orders Index climbed to 56.4.

The Prices Index produced one of the report’s largest monthly changes, rising 6.8 points to 77.9. By comparison, the headline Manufacturing PMI moved only 0.1 point lower.

Inventories were one area of contraction. The Inventories Index fell to 48.6 from 50.6 in August, moving below the 50 threshold after three months of expansion.

Supplier deliveries remained in slowing territory at 59.0, slightly below August’s 59.3. New export orders also remained in expansion at 50.9, although the measure declined from 53.2.

The broader picture was therefore one of continued manufacturing growth with varying conditions beneath the headline number. Demand and employment strengthened, production remained elevated, inventories contracted and manufacturers reported a faster increase in input prices.

September also extended the manufacturing sector’s expansion streak to nine months, while ISM reported that the broader U.S. economy had remained in expansion for 23 consecutive months.

Frequently Asked Questions

What was the U.S. manufacturing PMI in September 2026?

The U.S. Manufacturing PMI registered 54.5 in September 2026, compared with 54.6 in August. The reading marked a ninth consecutive month of manufacturing-sector expansion.

How much did the ISM Prices Index increase in September?

The Prices Index rose to 77.9 in September from 71.1 in August, an increase of 6.8 percentage points. ISM reported that raw-material prices increased for a 24th consecutive month.

What does a manufacturing PMI above 50 indicate?

A Manufacturing PMI reading above 50 generally indicates expansion in the U.S. manufacturing sector, while a reading below 50 generally indicates contraction.