Tempe, Ariz. – November 02, 2026 -- The ISM Manufacturing PMI rose to 55.5 percent in October from 54.5 percent in September, marking the 10th consecutive month of expansion in U.S. manufacturing. The Institute for Supply Management (ISM) reported that the overall economy has now expanded for 24 consecutive months.
Production Index jumps 2.3 points to 59 percent, highest since November 2021
The Production Index rose from 56.7 percent to 59 percent, its highest reading since November 2021 (60.5 percent). It has expanded for 12 months in a row, and the ratio of positive to negative comments improved to 2-to-1 from 1.6-to-1 in September.
The New Orders Index expanded for the 10th straight month after four consecutive contraction readings, registering 55.5 percent versus 55.3 percent in September. The Backlog of Orders Index fell 1.8 points to 54.6 percent. The New Export Orders Index gained 0.3 point to 51.2 percent.
The Employment Index slipped 0.3 point to 52.4 percent, though it remained in expansion. The positive-to-negative comment ratio on employment was 1.8-to-1.
Prices Index eases 2.7 points to 75.2 percent but stays in increasing territory
The Prices Index fell from 77.9 percent to 75.2 percent. The Supplier Deliveries Index rose 0.1 point to 59.1 percent, its 11th straight month of slowing deliveries after one month in faster territory. ISM notes that Supplier Deliveries is the only inverted index in the report.
The Inventories Index returned to expansion at 51.4 percent, up 2.8 points from 48.6 percent. The Customers' Inventories Index held at 41.6 percent, unchanged from September. ISM considers a reading that low usually positive for future production. The Imports Index gained 1.9 points to 52.9 percent.
Negative comments reach 66 percent as sentiment worsens for a third month
Only 34 percent of respondent comments were positive in October, a 1-to-2 ratio of positive to negative. Among the negative comments, 62 percent cited pricing volatility, 41 percent longer lead times, 25 percent tariffs and 21 percent the Iran war. Most comments cited multiple factors.
Four of the five PMI subindexes (New Orders, Production, Supplier Deliveries and Inventories) grew faster than in September. Employment was the exception.
Share of manufacturing GDP in contraction triples to 6 percent
Six percent of manufacturing GDP contracted in October, compared with 2 percent in September. The share in strong contraction, defined as a composite PMI of 45 percent or lower, also rose to 6 percent from 2 percent. ISM describes that share as a good gauge of overall manufacturing weakness.
Twelve industries reported growth, in this order: Plastics & Rubber Products; Electrical Equipment, Appliances & Components; Machinery; Computer & Electronic Products; Textile Mills; Primary Metals; Transportation Equipment; Fabricated Metal Products; Furniture & Related Products; Chemical Products; Miscellaneous Manufacturing; and Food, Beverage & Tobacco Products. Printing & Related Support Activities, Paper Products and Nonmetallic Mineral Products contracted. Five of the six largest industries expanded: Machinery; Computer & Electronic Products; Transportation Equipment; Chemical Products; and Food, Beverage & Tobacco Products.
Respondents report lead times stretching from four to 50 weeks and costs doubling
A Machinery respondent cited explosive demand in semiconductors and government/defense. Lead times on some items have stretched from four weeks to 50, and a US$2,000 item from six months ago now costs US$4,000. The company says it is operating "hand-to-mouth."
A Chemical Products respondent said costs are up more than 6 percent this year, against a planning assumption of 2 to 3 percent inflation. Of the tracked spend items, 24 are higher, nine are lower and six are neutral.
A Miscellaneous Manufacturing respondent reported supply and pricing strains in any commodity consumed by AI and data centers. A Transportation Equipment respondent said the usual fourth-quarter bump from end-of-year budgets has not materialized. A Fabricated Metal Products respondent said Canadian tariffs continue to hurt small U.S. businesses selling into that market.