The ISM (Institute for Supply Management) Manufacturing PMI registered 55.5% in October, marking the 10th consecutive month of expansion for the manufacturing industry. The 55.5% figure is one percentage point above September’s 54.5% reading, indicating growth at a faster rate.

“Of the five subindexes that make up the PMI, four (new orders, production, supplier deliveries and inventories) grew faster than the previous month, while employment growth slowed down by 0.3 percentage point,” says Susan Spence, chair of the ISM’s manufacturing business survey committee. A reading below 50% generally indicates contraction.

The new orders and production indexes grew at a faster rate, increasing 0.2 points to 55.5% and 2.3 points to 59.0%, respectively. The employment index remained in expansion territory but declined 0.3 points for an October reading of 52.4%, indicating growth at a slower rate.

“In October, three of four demand indicators (the new orders, backlog of orders and new export orders indexes) remained in expansion, and the customers’ inventories index remained in ‘too low’ territory, contracting at the same rate as last month,” says Spence. “A ‘too low’ status for the customers’ inventories index is usually considered positive for future production.”

12 manufacturing industries reported growth in October:

• 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
• Food, beverage & tobacco products

“Of the six largest manufacturing industries, five (machinery; computer & electronic products; transportation equipment; chemical products; and food, beverage & tobacco products) expanded in October,” Spence says.

34% of the survey’s comments were positive and 66% were negative, marking the third consecutive month of worsening general sentiment, according to Spence.

One respondent in the fabricated metal products sector says, “Economic policies coming out of Washington continue to weigh on business conditions. Customers are unwilling to make commitments to anything other than the shortest term due to the vast uncertainty. Canadian tariffs continue to damage small U.S. businesses selling into that important market.”

Another respondent in miscellaneous manufacturing writes, “New month, same trends: Any commodity consumed by AI/data centers is in a crunch, both for supply and pricing. We keep wondering when the madness will stop. In spite of these challenges, our demand remains strong and the supply chain is getting by, albeit with a lot of work. As we plan next year’s budget, it’s sobering to roll up the annualized impact of (1) remaining tariffs, (2) AI-impacted commodity price increases and (3) price increases related to geopolitically influenced commodities.”