U.S. manufacturing expands for a ninth consecutive month! September ISM PMI edges down to 54.5, new orders grow but cost pressures heat up again.

U.S. manufacturing continued to expand in September, and although the pace of growth slowed slightly, strong demand and steadily rising orders continued to support the sector. At the same time, higher raw material prices and supply chain shipping delays intensified again, indicating that U.S. manufacturing is facing a new round of cost pressures during its recovery. Data released by the Institute for Supply Management (ISM) on Thursday showed that the September ISM Manufacturing Purchasing Managers' Index (PMI) fell 0.1 percentage point from August to 54.5, indicating a slight slowdown in the pace of manufacturing expansion. However, the index has remained above the 50 boom-or-bust line for nine consecutive months, the longest streak of sustained expansion since 2022. Looking at the specific subindexes, U.S. manufacturing demand remained solid in September. The new orders index rose further, while the backlog of orders index climbed to its highest level since February of this year, indicating that manufacturers' order backlogs continued to increase and providing support for future production activity. At the same time, manufacturing production activity continued to expand, though at a slower pace than before. Since U.S. manufacturing emerged from a slump that lasted several years in early 2026, the overall recovery has remained stable. Resilient consumer spending, steady business investment and government defense spending have jointly driven the rebound in manufacturing activity. Although the Middle East conflict has pushed up energy costs and disrupted some shipping routes, so far rising costs and supply chain bottlenecks have not interrupted the momentum of manufacturing expansion. As orders continue to increase, U.S. manufacturers have also begun to expand hiring to meet growing production demand. The data showed that manufacturing employment rose for a third consecutive month in September, the longest streak of sustained job growth since 2022. This indicates that, driven by improving demand, manufacturers still maintain a certain degree of confidence in adding workers. However, alongside the manufacturing recovery, cost pressures are building again. The ISM report showed that the raw material prices index rose in September to its highest level since May of this year, reflecting a further increase in input costs faced by manufacturers. At the same time, supplier delivery times continued to lengthen. Although the degree of delays eased somewhat compared with before, supply chain operations are still subject to certain constraints. Rising energy prices are one of the important sources of cost pressure for manufacturing. The ongoing Middle East conflict has pushed up energy prices and disrupted some international shipping routes, further increasing the burden on companies in raw material procurement and goods transportation. This means that although manufacturing demand remains strong, companies need to strike a balance between expanding production and controlling costs. If raw material and transportation costs continue to rise, this could further affect manufacturers' profit margins in the future and increase the pressure on companies to pass costs on to downstream customers. In terms of industry performance, the expansion in U.S. manufacturing in September was somewhat broad-based. ISM data showed that a total of 12 manufacturing industries reported growth in September, including electrical equipment, primary metals and machinery manufacturing. By contrast, industries such as printing and textile mills remained in contraction, indicating differences in the degree of recovery across manufacturing sectors. Overall, the September ISM manufacturing PMI edged down but remained in expansion territory at 54.5. Rising new orders, higher backlogs and continued employment growth all indicate that U.S. manufacturing remains highly resilient. However, the coexistence of strong demand and rising costs also gives the manufacturing recovery a certain inflationary pressure. Against the backdrop of high energy prices and supply chain bottlenecks that have not yet been fully eliminated, future changes in raw material prices and delivery times will become important indicators for observing whether U.S. manufacturing can maintain its current expansion momentum.