U.S. Manufacturing Expands for Third Straight Month Amid Rising Prices and Geopolitical Pressures

Event summary

  • The ISM Manufacturing PMI® rose to 52.7 in March 2026, up 0.3 points from February, indicating continued expansion in the manufacturing sector.
  • New Orders Index grew for the third consecutive month but slowed to 53.5, while Production Index increased to 55.1, its fastest pace in five months.
  • Employment Index contracted for the 30th straight month, with 55% of panelists managing headcounts rather than hiring.
  • Prices Index surged to 78.3, its highest level since June 2022, driven by rising steel, aluminum, and petroleum-based product costs.
  • Geopolitical tensions from the Iran war and tariff uncertainty contributed to 64% of negative comments from respondents.

The big picture

The U.S. manufacturing sector continues its expansion for the third consecutive month, though faced with rising input costs and geopolitical uncertainties. The surge in the Prices Index to its highest level in over three years signals sustained inflationary pressures, while the persistent contraction in employment highlights cautious hiring practices. The sector's growth is supported by strong demand in key industries like transportation equipment and chemical products, but the impact of the Iran war and tariff policies remains a significant wildcard.

What we're watching

Geopolitical Risks
How the Iran war will continue to impact supply chains, energy costs, and manufacturing operations globally.
Cost Inflation
Whether manufacturers can sustain price increases amid rising raw material and energy costs.
Employment Trends
The pace at which manufacturing employment will recover as production demand grows.