U.S. Manufacturing Expansion Slows in September 2026 Amid Pricing…

Event summary

The ISM Manufacturing PMI® registered 54.5% in September 2026, down 0.1 percentage points from August, marking the ninth consecutive month of expansion.
New Orders Index rose 1.6 points to 55.3%, while Production Index fell 1.6 points to 56.7%, indicating mixed demand signals.
Prices Index surged 6.8 points to 77.9%, the highest since the start of the Iran War, driven by steel, aluminum, and tariff-related cost increases.
Employment Index increased 1.5 points to 52.7%, with 8 of 18 industries reporting employment growth, but labor shortages persist.
12 of 18 manufacturing industries expanded in September, with Printing & Related Support Activities and Textile Mills contracting.

The big picture

U.S. manufacturing continues its expansion streak but faces headwinds from geopolitical tensions, tariff uncertainties, and persistent pricing pressures. The sector's resilience is being tested by structural challenges like overcapacity in chemicals and supply chain constraints in electronics. While demand indicators remain positive, the slowing pace of growth suggests potential vulnerabilities in the face of external shocks.

What we're watching

Pricing Volatility: Whether the 6.8-point surge in the Prices Index signals sustained inflation or temporary supply chain disruptions.
Tariff Impact: How new tariffs against Canada will affect cross-border manufacturing costs and supply chain strategies.
Labor Shortages: The pace at which severe worker shortages will limit production output across key industries.