The ISM Manufacturing PMI rose to 55.5 in October from 54.5 in September, the Institute for Supply Management said Monday.
The reading beat the 54.6 consensus and marked a 10th consecutive month of expansion for US factories. Any reading above 50 means the sector is growing.
Production did the heavy lifting, jumping to 59.0 from 56.7, the highest since November 2021, when it hit 60.5.
New orders inched up to 55.5 from 55.3. Inventories returned to growth at 51.4 after 48.6 in September, and imports climbed to 52.9 from 51.0.
Hiring was the soft spot. The employment index slipped to 52.4 from 52.7, still in expansion but losing steam.
Employment costs have their own story.
October ISM Manufacturing Indexes
ISM index level, October 2026, above 50 means expansion
Bar chart. Index level. PMI: Index Level 55.50. New Orders: Index Level 55.50. Production: Index Level 59. Employment: Index Level 52.40. Prices: Index Level 75.20.
Costs are still the story on factory floors
The prices index eased to 75.2 from 77.9, a level that still points to steep input inflation. It has signaled rising prices for 25 straight months. The backlog of orders eased to 54.6 from 56.4.
Survey sentiment got worse for a third month running. Some 66% of panelist comments were negative against 34% positive, according to the Institute for Supply Management.
Pricing volatility showed up in 62% of the negative comments, longer lead times in 41%, tariffs in 25%, and the Iran war in 21%.
Commodities listed as rising in price included copper, steel, semiconductors, memory components, and printed circuit boards. One machinery panelist described a $2,000 item from six months ago now costing $4,000. Aluminum appeared on both the rising and falling price lists.
The AI appetite for computing power has its own explainer.
Of the six largest manufacturing industries, five expanded, including machinery, computer and electronic products, transportation equipment, chemical products, and food, beverage and tobacco products. Supplier deliveries have now slowed for 11 straight months, and 12 of the manufacturing industries surveyed reported growth in October while three contracted.
Why the timing matters for rates
The report lands days before a dense run of labor data.
"In October, U.S. manufacturing activity remained in expansion territory."
Susan Spence, Institute for Supply Management
The manufacturing employment gauge feeds directly into payrolls expectations. Job openings data arrives Tuesday, with openings last at 7.079M and consensus at 7.13M.
Payrolls land Friday, forecast at 65K versus 29K previously, with the unemployment rate seen steady at 4.2%.
A firmer activity read tends to support revenue expectations in cyclical sectors while keeping upward pressure on borrowing costs. Rate-sensitive growth stocks usually feel that pressure most.
ISM says the October reading corresponds to a 2.7% annualized increase in real gross domestic product. The same report notes 6% of manufacturing GDP was in strong contraction in October, up from 2% in September.
Output accelerated, prices stayed elevated, and the share of the sector in deep decline tripled from the prior month.
