US manufacturing activity expanded at a faster-than-expected pace in October, with ISM Manufacturing PMI rising from 54.5 to 55.5, beating expectations of 54.7 and extending the sector’s expansion to ten consecutive months. The strongest improvement came from production, with the index climbing from 56.7 to 59.0, its highest reading since November 2021. New orders increased more modestly from 55.3 to 55.5, marking a tenth consecutive month of growth. All five components contributing directly to the headline PMI were in expansion territory, indicating broadly positive manufacturing conditions.
The acceleration in production was considerably stronger than the improvement in incoming demand. Inventories returned to expansion, with the index rising from 48.6 to 51.4, while purchasing conditions continued to reflect sustained factory activity. Employment growth moderated slightly as its index eased from 52.7 to 52.4, while backlogs increased at a slower pace, falling from 56.4 to 54.6. Export orders and imports also strengthened, suggesting continued activity across domestic production and international trade. However, the relatively small increase in new orders indicates that October’s stronger headline was driven more by production and inventory accumulation than by a substantial acceleration in new demand.
Meanwhile, input price pressures eased but remained elevated, with the Prices Paid Index falling from 77.9 to 75.2, below expectations of 77.5. Despite the decline, the index continued to signal widespread increases in manufacturing input costs, including energy, metals and electronic components. Supplier Deliveries edged up from 59.0 to 59.1, indicating slightly longer delivery times, while shortages persisted in several industrial inputs. Overall, the survey points to strengthening manufacturing activity supported by robust production, but with demand growth less pronounced and supply-related inflation pressures still substantial.
Data Summary
US ISM Manufacturing — October 2026
| Indicator | Sep | Expected | Oct |
|---|---|---|---|
| ISM Manufacturing PMI | 54.5 | 54.7 | 55.5 |
| New Orders | 55.3 | — | 55.5 |
| Production | 56.7 | — | 59.0 |
| Employment | 52.7 | — | 52.4 |
| Supplier Deliveries | 59.0 | — | 59.1 |
| Inventories | 48.6 | — | 51.4 |
| Prices Paid | 77.9 | 77.5 | 75.2 |
| Backlog of Orders | 56.4 | — | 54.6 |
| Customers’ Inventories | 41.6 | — | 41.6 |
| New Export Orders | 50.9 | — | 51.2 |
| Imports | 51.0 | — | 52.9 |
Key Takeaways
- Manufacturing expansion accelerated: ISM Manufacturing PMI rose from 54.5 to 55.5, exceeding expectations of 54.7 and extending expansion to ten consecutive months. All five headline components were in expansion territory.
- Production drove the improvement: The Production Index jumped from 56.7 to 59.0, its highest reading since November 2021. New orders increased only marginally, suggesting that the acceleration in factory output was considerably stronger than the improvement in incoming demand.
- Inventories returned to growth: The Inventories Index rose from 48.6 to 51.4, while customers’ inventories stayed at 41.6, a level classified as too low. This suggests potential scope for replenishment, although sustained production growth will depend on incoming demand.
- Employment and backlog growth moderated: Employment eased from 52.7 to 52.4, while backlogs declined from 56.4 to 54.6. Both remained in expansion territory, but indicated slower growth than September.
- Input inflation eased but remained elevated: Prices Paid fell from 77.9 to 75.2, below expectations of 77.5. However, widespread price increases persisted across energy, metals and electronic components, while supplier delivery times lengthened slightly further.
