US Factories Expand as Costs Climb

US manufacturing extended its expansion in September, with stronger demand and hiring offset by a sharp rise in input costs.

The ISM Manufacturing PMI edged down to 54.5 from 54.6 in August, narrowly missing the 55 forecast but staying comfortably above the 50 expansion threshold.

Orders Pick Up as Production Stays Strong

Demand improved across several parts of the sector:

New orders: Rose to 55.3 from 53.7
Employment: Increased to 52.7 from 51.2
Production: Stayed strong at 56.7, easing from 58.3
Inventories: Fell into contraction at 48.6
Order backlogs: Jumped to 56.4, signaling more unfinished demand

Supplier deliveries also remained slow, showing that factories are still dealing with delays even as new business picks up.

The Real Pressure Is Coming From Prices

Costs delivered the clearest warning. The prices index surged to 77.9 from 71.1, driven by higher steel, aluminum and prices related to petroleum. Import tariffs and the conflict with Iran added further pressure, making it more expensive for manufacturers to keep production moving.

Strong Demand, Tougher Conditions

The survey’s business comments were more cautious than the headline PMI. 60% were negative, with companies frequently citing price volatility, tariffs, the Iran war and longer delivery times. The sector is still growing, but the challenge has shifted. Orders are coming in and factories are producing, while rising costs and supply delays are making that growth harder to sustain.

Latest Analysis

Behind Strong US Earnings: AI and Oil

US corporate earnings continue to show solid growth, with artificial intelligence and the energy sector providing much of the momentum.

Detail

How Much Oil Is Left? (07.10.2026)

Oil stockpiles are nearing exhaustion globally, leaving supply more vulnerable to disruptions.

Detail