U.S. manufacturing picks up in October, with production at its best since 2021 — but factory mood keeps darkening
Editorial illustration — Press Pass USAU.S. manufacturing activity picked up in October on strong domestic demand, the Institute for Supply Management reported on Monday, November 2 — but the factories behind the numbers are growing gloomier, not more confident.
The ISM's manufacturing Purchasing Managers' Index rose to 55.5 in October from 54.5 in September, beating economists' forecast that it would stay flat at 54.5. A reading above 50 signals expansion, and the index has now pointed to growth for 10 consecutive months, in a sector that accounts for about 9.4% of the economy.
The standout was production: the factory production measure jumped 2.3 percentage points to 59.0, its highest reading since November 2021. New orders edged up to 55.5 from 55.3, with exports also rising, and factory inventories increased as well. Twelve industries reported growth, including transportation equipment, electrical equipment, appliances and components, machinery, primary metals, textile mills, and computer and electronic products. Three industries contracted: paper products, printing and related support activities, and nonmetallic mineral products.
Factory employment kept growing, though more slowly: the employment measure eased to 52.4 from 52.7 in September. Supplier deliveries inched up to 59.1 from 59.0, a sign of longer lead times as demand rises.
The catch is cost. The survey's gauge of prices paid for inputs eased to a still-high 75.2 from 77.9 in September, supporting economists' views that inflation will continue to run above the Federal Reserve's 2% target into 2027. The government's preferred inflation gauge, the Personal Consumption Expenditures price index, rose 3.6% over the past year in September.
And despite the stronger headline, sentiment among manufacturers got worse for a third month in a row, said Susan Spence, who chairs the ISM Manufacturing Business Survey Committee. Some survey respondents complained that "economic policies coming out of Washington continue to weigh on business conditions," while others said the situation was "making it impossible to make sound long-term decisions." Economists cautioned that rising interest rates and declining inflation-adjusted household income could hamper manufacturing next year, especially in segments not exposed to the artificial-intelligence spending boom.
The report lands against a stronger-than-expected growth backdrop: the government reported last week that the overall economy grew at a 3.4% annualized rate in the third quarter, after expanding at a 2.2% pace in the April–June period, with domestic demand growing at its fastest pace in more than five years.
Sources: Reuters, "US manufacturing strengthens in October, input prices stay high" (Nov. 2, 2026); Institute for Supply Management, "Manufacturing PMI® at 55.5%; October 2026 ISM® Manufacturing PMI® Report" (Nov. 2, 2026); Bloomberg, as reported by Transport Topics (Nov. 2, 2026).
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