Manufacturing Sector Expands for Tenth Consecutive Month
The U.S. manufacturing sector recorded its tenth straight month of expansion in October 2026, with the ISM PMI rising to 55.5%.
The U.S. manufacturing sector expanded for the tenth consecutive month in October 2026. The Institute for Supply Management's Purchasing Managers' Index (PMI) reached 55.5%, a one percentage point increase from September's reading of 54.5%.
Five of the six largest manufacturing industries reported growth. These were machinery; computer and electronic products; transportation equipment; chemical products; and food, beverage and tobacco products. In total, twelve manufacturing industries reported expansion for the month.
Key Subindexes Show Strong Momentum
Four of the five primary subindexes grew faster than in the previous month. The production index saw the strongest gain, while new orders and inventories also expanded.
| Index | October 2026 Reading | Change from September |
|---|---|---|
| Production | 59.0% | +2.3 percentage points |
| New Orders | 55.5% | +0.2 percentage points |
| Inventories | 51.4% | +2.8 percentage points |
| Supplier Deliveries | 59.1% | Increased (slowing performance) |
The production index's reading of 59.0% was the highest among the major components. The inventories index returned to expansion territory after a period of contraction.
Demand Indicators Remain Positive
Three of four key demand indicators remained in expansion territory during October. The new export orders index showed a slight gain, indicating continued international demand.
The backlog of orders index registered 54.6%, a decrease of 1.8 percentage points from September. The imports index also expanded, registering 52.9% for the month. The customers' inventories index remained level at 41.6%, a reading that indicates customer inventories are considered too low.
Pricing Pressures and Geopolitical Risks Persist
Price volatility and geopolitical conflict are creating significant headwinds. The prices index registered 75.2% in October. Susan Spence noted the trend, stating, "Prices, unfortunately, are in their 25th straight month of increase."
Costs in the chemical products industry were up more than 6 percent year over year. Survey comments were increasingly negative, with 66% of responses classified as negative and only 34% positive. This marks the third consecutive month of worsening sentiment among purchasing managers.
The Iran war and ongoing trade wars were cited as primary concerns. Global demand for capital scientific instrumentation assets has slowed due to continued uncertainty in the Middle East, Eastern Europe, and China. Supplier deliveries indicated slowing performance for the eleventh consecutive month.
Employment growth slowed slightly, with the index reading 52.4%, down 0.3 percentage points from September. An alternative PMI reading from S&P Global was 54.9 in October, down one point from the previous month. The manufacturing sector's expansion has now lasted for ten straight months.
