U.S. manufacturing activity continued to gain momentum in October, signaling that the sector remains on a solid growth trajectory. According to the latest Manufacturing PMI report from the Institute for Supply Management (ISM), the Manufacturing PMI registered 55.5%, up from 54.5% in September and marking the sector’s 10th consecutive month of expansion. The reading also indicates the broader U.S. economy has now expanded for 24 consecutive months.
▶ Watch: Susan Spence explains the latest ISM Manufacturing PMI outlook on Manufacturing Talk Radio.
The October report shows that growth is becoming increasingly broad-based across manufacturing. Four of the five major PMI components accelerated during the month, including new orders, production, supplier deliveries, and inventories. Production posted one of the strongest gains, reaching 59.0% from 56.7% in September, its highest reading since November 2021. The increase suggests manufacturers are ramping up output to meet ongoing customer demand and growing order volumes.
New orders remained a key driver of growth. The New Orders Index registered 55.5%, its 10th consecutive month in expansion territory. Sustained new order growth is particularly important because it serves as a leading indicator of future manufacturing activity. Strong order pipelines typically translate into higher production levels, increased purchasing activity, and continued demand for labor and capital investment.
Employment also continued to expand, although at a slower pace. The Employment Index registered 52.4%, slightly below September’s 52.7% reading. While the labor market remains a challenge for many manufacturers, the continued expansion suggests companies are still adding workers to support growing demand. At the same time, manufacturers continue to report challenges related to workforce availability, skills development, and labor costs.
One of the more notable developments in the report involves inventories. The Inventories Index returned to growth territory at 51.4%, up from 48.6% in September. Meanwhile, customers’ inventories remained at a relatively low 41.6%, indicating many buyers continue to view inventory levels as insufficient. Historically, low customer inventories can create additional demand for future manufacturing output as businesses replenish stock levels.
Pricing pressures remain a concern despite some improvement. The Prices Index registered 75.2%, down from 77.9% in September but still indicating widespread increases in input costs across the manufacturing sector. Although inflationary pressures have moderated somewhat, manufacturers continue to face elevated raw material and supply-chain-related costs that can affect profitability and investment decisions.
The strength of manufacturing activity extends across multiple industries. ISM reported growth in sectors including machinery, primary metals, transportation equipment, fabricated metal products, electrical equipment, computer and electronic products, chemicals, plastics, food and beverage production, and several other industrial categories. The broad participation suggests that expansion is occurring across large portions of the manufacturing economy rather than being concentrated in a limited number of industries.
For manufacturers, the latest PMI report reinforces a positive outlook heading into the final months of the year. Strong production levels, steady order growth, rising inventories, and continued hiring all point toward ongoing industrial expansion. While inflation and workforce availability remain challenges, the overall health of the sector continues to improve as demand remains resilient.
The October ISM Manufacturing PMI report indicates that U.S. manufacturing continues to build momentum. With the PMI reaching 55.5%, production hitting its highest level since 2021, and new orders expanding for a 10th consecutive month, manufacturers appear well-positioned for continued growth. Although pricing pressures and labor challenges remain concerns, the broad-based nature of the expansion suggests the sector is entering the final months of the year with strong fundamentals and sustained demand supporting future activity.
Watch the full conversation: ISM Manufacturing PMI Reaches 55.5: Susan Spence Explains the Latest Manufacturing Outlook.
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