Introduction
The U.S. manufacturing PMI remained firmly in expansion territory in September, registering 54.5, according to the Institute for Supply Management. The reading was only 0.1 percentage point below August’s 54.6, marking the ninth consecutive month of manufacturing expansion.
The headline number tells only part of the story. New orders accelerated, employment strengthened and backlogs increased, while the prices index jumped sharply to 77.9. Supplier deliveries also remained slow, pointing to continued pressure across the manufacturing supply chain.
Reuters reported that strong domestic demand, including demand associated with AI infrastructure, helped support factory activity, even as manufacturers faced higher input costs and supply-chain disruptions.
Background and Context
The ISM Manufacturing PMI is a monthly survey-based indicator designed to measure activity across the U.S. manufacturing sector.
A reading above 50 generally indicates expansion, while a reading below 50 indicates contraction. The September reading of 54.5 therefore indicates that manufacturing activity continued to expand.
The September result extends a significant turnaround for the sector.
According to ISM, U.S. manufacturing had contracted for 10 consecutive months before beginning its current expansion streak. September therefore marked the ninth consecutive month of growth.
The broader U.S. economy also remained in expansion territory for the 23rd consecutive month based on the historical relationship between the PMI and overall economic activity, according to ISM.
The latest data is particularly important because manufacturing is simultaneously benefiting from stronger demand while dealing with rising prices, slower supplier deliveries and constrained inventories.
Latest Update: U.S. Manufacturing PMI Holds Above 54
The September ISM report paints a mixed but generally expanding picture of American manufacturing.
| Manufacturing Indicator | September 2026 | August 2026 | Change |
|---|---|---|---|
| Manufacturing PMI | 54.5 | 54.6 | -0.1 |
| New Orders | 55.3 | 53.7 | +1.6 |
| Production | 56.7 | 58.3 | -1.6 |
| Employment | 52.7 | 51.2 | +1.5 |
| Supplier Deliveries | 59.0 | 59.3 | -0.3 |
| Inventories | 48.6 | 50.6 | -2.0 |
| Prices | 77.9 | 71.1 | +6.8 |
| Backlog of Orders | 56.4 | 51.8 | +4.6 |
| New Export Orders | 50.9 | 53.2 | -2.3 |
| Imports | 51.0 | 52.5 | -1.5 |
The numbers show that demand remained strong, even though production itself slowed from August’s unusually high level.
New Orders Accelerate
The New Orders Index rose to 55.3, up from 53.7 in August.
That represents the ninth consecutive month of growth in new orders. The September increase was also faster than the previous month, suggesting that manufacturers continued to see healthy demand for their products.
This is one of the strongest signals in the report because new orders provide an indication of future production requirements.
The Backlog of Orders Index reinforced that picture, rising from 51.8 to 56.4.
That 4.6-point increase indicates that manufacturers accumulated more unfinished orders during September.
Production Remains Strong
The Production Index registered 56.7, down from 58.3 in August.
Although production growth slowed, the index remained comfortably above 50 and represented the 11th consecutive month of production expansion.
The combination of growing new orders and expanding production suggests manufacturers are still operating in a relatively healthy demand environment.
The challenge is whether factories can maintain that momentum while input costs and supplier constraints increase.
Manufacturing Jobs Show Improvement
Employment was another positive part of the September report.
The ISM Employment Index increased to 52.7 from 51.2, its third consecutive month in expansion territory.
That is important because manufacturing employment had experienced a prolonged period of weakness before the recent improvement.
The September reading suggests manufacturers were adding workers or increasing employment levels as demand strengthened.
Reuters reported that the factory employment index was consistent with an estimated increase of about 10,000 manufacturing jobs in September, although the official Labor Department employment report would provide the broader employment picture.
The employment trend therefore deserves close attention in the coming months.
If orders and backlogs remain strong, manufacturers may need additional labor capacity.
If input costs continue rising, however, companies could face pressure to improve productivity rather than simply expand headcount.
AI Demand Is Becoming a Manufacturing Driver
One of the most important structural themes behind the current manufacturing expansion is AI infrastructure spending.
Reuters reported that strong domestic demand associated with AI infrastructure helped support U.S. manufacturing activity in September.
AI-related investment creates demand for a broad ecosystem of physical products.
That includes:
- Semiconductors
- Data-center equipment
- Electrical components
- Power infrastructure
- Cooling systems
- Networking equipment
- Servers
- Industrial machinery
- Construction materials
The September ISM report also showed that Computer & Electronic Products was among the major manufacturing industries reporting expansion.
That connection between digital investment and physical manufacturing is becoming increasingly important.
AI may be software-driven, but the infrastructure required to run AI systems depends heavily on factories, semiconductor plants, electrical equipment manufacturers and complex industrial supply chains.
Input Prices Surge
The biggest warning signal in the September report was the Prices Index.
It jumped from 71.1 in August to 77.9 in September, an increase of 6.8 percentage points.
That indicates significantly stronger price increases for manufacturing inputs.
ISM reported higher prices for commodities and materials including:
- Aluminum
- Copper
- Diesel fuel
- Electrical components
- Electronic components
- Freight
- Fuel
- Memory components
- Semiconductors
- Steel
- Zinc
- Packaging materials
- Plastics and resins
Manufacturers also reported shortages involving aluminum products, copper, DRAM, electrical components, electronic components, memory, printed circuit boards, steel and tungsten products.
That creates a difficult operating environment.
Factories may have strong orders, but the cost of fulfilling those orders is increasing.
Supply Chains Remain Under Pressure
Supplier performance remained another concern.
The Supplier Deliveries Index registered 59.0 in September.
For this particular ISM indicator, a reading above 50 means deliveries are getting slower rather than faster.
September therefore represented the 10th consecutive month of slower supplier deliveries.
Five of the six largest manufacturing industries reported slower supplier deliveries:
- Computer & Electronic Products
- Machinery
- Food, Beverage & Tobacco Products
- Transportation Equipment
- Chemical Products
This is particularly relevant for manufacturers operating complex just-in-time production systems.
Even when customer demand is strong, delayed components can prevent factories from converting orders into finished products.
Expert Insights or Analysis
The September U.S. manufacturing PMI suggests the sector is experiencing a form of growth that comes with significant operational friction.
Demand is not the primary problem.
New orders increased. Backlogs increased. Employment increased. Production remained in expansion.
Instead, manufacturers are dealing with the cost and availability of the inputs required to satisfy that demand.
That distinction matters.
A factory can have a full order book but still struggle to increase output if semiconductor components, electrical equipment, metals or other critical inputs are expensive or difficult to obtain.
ISM’s commodity comments provide evidence of exactly that situation.
At the same time, the AI infrastructure boom provides a powerful source of demand. Reuters’ reporting connects AI-related investment with the resilience of U.S. manufacturing and broader global factory activity.
This creates an unusual combination:
Strong demand + higher input costs + slower suppliers.
The result is an expansionary manufacturing environment, but one in which margins and production efficiency could become increasingly important.
Broader Implications for U.S. Manufacturing
The September PMI has implications beyond factories themselves.
Manufacturing affects transportation companies, suppliers, distributors, construction firms, technology companies and retailers.
When factory orders rise, manufacturers typically require more raw materials and components.
That creates additional demand for:
- Trucking
- Rail transportation
- Warehousing
- Ports
- Industrial real estate
- Packaging
- Equipment maintenance
- Energy
- Business services
The reverse is also true.
If supply-chain constraints become severe enough to limit production, transportation volumes can eventually weaken.
The current data therefore suggests that the manufacturing and logistics sectors remain closely connected.
For The Tech Marketer, this creates an opportunity to link this coverage with an internal U.S. manufacturing and supply-chain analysis hub covering factory automation, industrial technology, logistics and AI infrastructure.
Inventory Levels Send Another Signal
The Inventories Index fell to 48.6 in September, down from 50.6 in August.
That means manufacturing inventories moved back into contraction territory.
At the same time, the Customers’ Inventories Index fell to 41.6, remaining firmly in the “too low” category.
ISM says customer inventories being too low is generally considered positive for future production.
The logic is straightforward.
If customers are holding relatively little inventory while new orders remain strong, manufacturers may need to keep producing to replenish those stocks.
That could provide additional support for factory activity in the months ahead.
The Manufacturing Supply Chain Is Becoming More Strategic
The September numbers also highlight why supply-chain management has become a central manufacturing issue.
Manufacturers are no longer dealing simply with questions about how much they can produce.
They are also managing:
- Component availability
- Supplier reliability
- Input-price volatility
- Freight costs
- Energy prices
- Inventory levels
- Semiconductor availability
- Production scheduling
- Customer demand
The ISM report listed freight, fuel, electronic components, semiconductors, steel and copper among commodities reported higher in price.
That combination can make supply-chain visibility increasingly valuable.
Manufacturers that can identify shortages earlier may have more time to find alternative suppliers, adjust production schedules or build inventory strategically.
Related History or Comparable Manufacturing Cycles
The September report marks a continuation of the manufacturing recovery that began at the start of 2026.
The PMI moved from:
| Month | Manufacturing PMI |
|---|---|
| October 2025 | 48.8 |
| November 2025 | 48.0 |
| December 2025 | 47.9 |
| January 2026 | 52.6 |
| February 2026 | 52.4 |
| March 2026 | 52.7 |
| April 2026 | 52.7 |
| May 2026 | 54.0 |
| June 2026 | 53.3 |
| July 2026 | 55.6 |
| August 2026 | 54.6 |
| September 2026 | 54.5 |
The sequence shows a clear transition from contraction late in 2025 to sustained expansion throughout 2026.
The September number is below July’s 55.6 peak, but it remains well above the 50 threshold.
That means the current story is not one of explosive acceleration.
It is sustained expansion with increasing cost pressure.
What Happens Next
The next few months will determine whether the manufacturing expansion remains broad-based.
Several indicators deserve close attention.
1. Input Prices
The jump to 77.9 makes prices one of the most important indicators to watch.
If price pressures remain elevated, manufacturers could face pressure on margins and potentially pass some costs through to customers.
2. New Orders
New orders reached 55.3 in September.
Continued growth would provide manufacturers with the demand necessary to sustain production and hiring.
3. Employment
Employment rose to 52.7.
A continued improvement would provide evidence that manufacturers are responding to stronger demand by expanding their workforce.
4. Supplier Deliveries
The Supplier Deliveries Index remained at 59.0.
If delivery times continue to slow, manufacturers could face additional production bottlenecks.
5. AI Infrastructure
AI-related capital investment remains an important source of demand for semiconductors, electronics, electrical equipment and other industrial products.
The pace of that investment will be an important variable for U.S. manufacturing.
6. Inventories
Customer inventories remained too low while manufacturing inventories moved below 50.
That combination could support additional production if demand remains strong.
What This Means for U.S. Manufacturers
For manufacturers, the September data presents a relatively clear operating environment.
Demand is available, but inputs are getting more expensive.
Companies with strong order books may have opportunities to increase production, particularly in industries benefiting from AI infrastructure investment.
But they also need to manage the cost side carefully.
Steel, aluminum, copper, semiconductors, electrical components, freight and fuel are all appearing in the current pricing and shortage data.
That puts greater emphasis on procurement strategy and supplier diversification.
Manufacturers may also continue investing in automation and productivity improvements as a way to increase output without relying entirely on additional labor.
The combination of stronger orders and higher input costs makes operational efficiency increasingly important.
Conclusion
The U.S. manufacturing PMI remained strong in September, registering 54.5 and marking the ninth consecutive month of expansion.
The underlying data shows a manufacturing sector supported by rising new orders, expanding employment, larger backlogs and continued demand from areas including AI infrastructure.
But the expansion comes with significant pressure.
The Prices Index jumped to 77.9, supplier deliveries remained slow for a 10th consecutive month, and manufacturers reported shortages involving important materials and electronic components.
That leaves U.S. factories in an unusual position.
Demand is strong enough to keep production growing, but the cost and complexity of meeting that demand are increasing.
The next phase of the manufacturing recovery will therefore depend not only on how much customers want to buy, but also on whether manufacturers can secure materials, manage costs and keep production moving.
FAQ
What is the U.S. manufacturing PMI for September 2026?
The U.S. manufacturing PMI was 54.5 in September 2026, down slightly from 54.6 in August. A reading above 50 indicates expansion in manufacturing activity.
Has U.S. manufacturing expanded for nine consecutive months?
Yes. September marked the ninth consecutive month of manufacturing expansion according to the Institute for Supply Management.
What is driving U.S. manufacturing growth?
New orders, production and domestic demand are supporting the expansion. Reuters also reported that demand connected to AI infrastructure is contributing to manufacturing activity.
Are U.S. manufacturing jobs increasing?
The ISM Employment Index increased to 52.7 in September from 51.2 in August, marking the third consecutive month of employment growth in the manufacturing survey.
Why are manufacturing input costs rising?
ISM reported higher prices for commodities including aluminum, copper, diesel fuel, electrical components, electronic components, freight, fuel, semiconductors and steel.
How are supply chains affecting U.S. manufacturers?
Supplier deliveries remained slow in September, with the Supplier Deliveries Index at 59.0. Manufacturers also reported shortages of several electrical, electronic, metal and semiconductor-related products.
How is AI affecting U.S. manufacturing?
AI infrastructure investment is contributing to demand for semiconductors, electronics, electrical equipment, networking systems and other industrial products. Reuters identified AI-related demand as one factor supporting U.S. manufacturing activity in September.
Sources & References
- “Manufacturing PMI® at 54.5%; September 2026 ISM® Manufacturing PMI® Report,” Institute for Supply Management, October 1, 2026. Read the full ISM September 2026 report
- “US manufacturing steady in September, input prices increase,” Reuters, October 1, 2026. Read the Reuters report
- “August 2026 ISM Manufacturing PMI Report,” Institute for Supply Management, September 1, 2026. Read the August ISM report
- “Global factory activity boosted by AI spending boom,” Reuters, October 1, 2026. Read the global manufacturing analysis
