U.S. manufacturing activity showed solid growth during October, according to the latest Purchasing Managers Index from the Institute of Supply Management, published No. 2.

Seen as a reliable health barometer for the industrial sector, the PMI registered 55.5% in October — a one-point jump from September and comfortably exceeding market expectations of 54.6%.

Two of the PMI’s five core subindexes had considerable monthly growth to power the top-line figure, led by the Production index’s 2.3-point gain to 59.0% for its best reading since November 2021 (60.5%). The Inventories index moved into expansion territory with a 2.8-point gain to 51.4%, while New Orders and Supplier Deliveries each had a modest bump and Employment edged down.

Within the other five subindexes, Prices declined 2.7 points; Imports grew by 1.9 points; New Export Orders ticked up 0.3 points; Customer Inventories were flat; and Backlog of Orders slid 1.8 points.

ISM shared that 6% of the manufacturing sector’s GDP contracted in October, compared to just 2% in September, and 6% of GDP was in strong contraction (composite PMI of 45% or lower), — up from September’s 2%.

Five of the six largest manufacturing industries expanded in October (same as September and August), in the order of Machinery; Computer & Electronic Products; Transportation Equipment; Chemical Products; and Food, Beverage & Tobacco.

ISM PMI October Survey Respondent Commentary

In the October survey commentary collected by the ISM, 34% of comments were positive and 66% negative — moving more negatively from 40/60% in September. Among negative comments, pricing volatility was mentioned in 62%; tariffs 25%; the Iran war 21%; and increasing lead times 41%; while most negative comments mentioned multiple factors.

Here is a sampling of commentary provided by ISM in its October manufacturing PMI report:

• “Negative, inflation, in the red’ are the three words or phrases that best describe our strategic sourcing for 2026. We generally assume inflation at 2 percent to 3 percent year over year, and we usually do a great job keeping costs under the 2-percent increase. This year, costs are up more than 6 percent, and we are not doing much to keep any of the spend categories under the target. Of the tracked items, only nine are lower, 24 are higher and six are neutral. The red is a bit disturbing. Despite the cost pressures, sales have been OK. It won’t be a great year. It’s hard to get excited about OK or just getting by. U.S. economic policy has suffered another year, making it impossible to make sound long-term decisions.” [Chemical Products]
• “Global demand for capital scientific instrumentation assets has slowed due to continued uncertainty in the Middle East, Eastern Europe and China. Anticipation over the midterm elections and impact to funding for scientific research and the National Institutes of Health also is impacting customers’ purchasing behavior, making them focus on optimizing existing technology and tools.” [Computer & Electronic Products]
• “Economic policies coming out of Washington continue to weigh on business conditions. Customers are unwilling to make commitments to anything other than the shortest term due to the vast uncertainty. Canadian tariffs continue to damage small U.S. businesses selling into that important market.” [Fabricated Metal Products]
• “Inflationary pressures and volatile commodity markets continue to create challenging scenarios and unfavorable impact to purchase price variance. Diesel rates and the trucker shortage are impacting costs beyond the raw material inputs to levels I have never seen.” [Food, Beverage & Tobacco Products]
• “Business remains strong, largely driven not only by data centers and mission critical infrastructure, but also the continued replacement of municipal infrastructures particularly related to water. Mining continues to be strong as well.” [Machinery]
• “Explosive growth in the semiconductor and government/defense spaces has put us on our heels as we try to work through demand. The long-awaited wave has arrived for our company, and it seems the global supply chain is in similar straits. Lead times and prices are increasing, and some carry COVID-19 era delays — four weeks is now 50 weeks; a US$2,000 item six months ago is now $4,000. We are hand-to-mouth. All the while, our customers are breaking down the doors complaining about our delivery delays.” [Machinery]
• “New month, same trends: Any commodity consumed by AI/data centers is in a crunch, both for supply and pricing. We keep wondering when the madness will stop. In spite of these challenges, our demand remains strong and the supply chain is getting by, albeit with a lot of work. As we plan next year’s budget, it’s sobering to roll up the annualized impact of (1) remaining tariffs, (2) AI-impacted commodity price increases and (3) price increases related to geopolitically influenced commodities.” [Miscellaneous Manufacturing]
• “Customers continue to be in a wait-and-see mode. There is no momentum to purchase, as our customers’ customers aren’t in urgent need of equipment. There has been tentative talk of 2027 purchases, but no discussion of larger-than-historical needs moving into the new year. Customers continue to be gobsmacked by the high price of equipment when they ask for quotes. Typically, we see a fourth-quarter bump as customers use up end-of-year budgets. This year, that bump does not exist.” [Transportation Equipment]
• “The trucking industry is experiencing mixed signals. While major companies are making significant strategic investments and consolidations (acquisitions, autonomous technology and electric vehicle infrastructure), underlying freight demand appears softer. Truck tonnage metrics are declining year-over-year, new-vehicle sales are falling, and consumer confidence is weakening. However, elevated diesel prices continue to support trucking company revenues through fuel surcharges, even as freight volumes remain challenged. The economy is growing at a moderate pace, with inflation concerns persisting.” [Transportation Equipment]
• “Material shortages abound. Fuel remains high. Uncertainty remains constant. Though not a presidential election, the election-year dynamic has begun to take hold a bit. Canadian tariffs continue to have a negative impact on steel.” [Primary Metals]