U.S. ISM Manufacturing Index (October 2026)

ISM manufacturing picks up as demand holds firm and price pressures ease 

• The manufacturing PMI rose 1.0 point to 55.5 in October, its 10th consecutive month of expansion, with all five headline components above 50. 
• Demand remained encouraging: new orders rose 0.2 points to 55.5, and export orders edged up 0.3 points to 51.2. Backlogs eased 1.8 points to 54.6 but remained in expansion, while customer inventories stayed low at 41.6. 
• The production index climbed 2.3 points to 59.0, its highest since November 2021 and 12th month of expansion. Employment edged down 0.3 points to 52.4 but expanded for a fourth consecutive month. 
• The prices index fell 2.7 points to 75.2, the largest monthly decline, partially reversing September’s 6.8-point surge, though input-cost increases remained widespread. 
• Manufacturers’ inventories rose 2.8 points to 51.4, the largest monthly move, returning to expansion. Imports increased by 1.9 points to 52.9, while supplier deliveries edged up 0.1 points to 59.1, indicating longer delivery times. 
• Respondent commentary echoed the firm demand signal: one noted that “our demand remains strong”. Another commented, “Lead times and prices are increasing,” consistent with slower supplier deliveries and input costs still rising despite the decline in the prices index.   

Key Implications

• October’s report offers encouraging signs that manufacturing demand is holding up as production gains momentum. New orders continued to grow, export orders improved and customer inventories remained low. Although backlogs grew more slowly, their continued expansion points to a pipeline of work that should support near-term output. 
• The decline in the prices index is a welcome counterpoint to stronger activity, suggesting some easing in input-cost pressures after September’s sharp increase. That is encouraging for the goods-inflation outlook, but the still-elevated reading and persistent supplier delays argue against declaring the inflation challenge resolved. 

 

 

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