ISM® PMI® Reports Roundup: October Manufacturing

Panelist sentiment in the ISM^® Manufacturing PMI^® Report for October could be summed up by a thought familiar to many reluctant schoolchildren (of, if one prefers, Indiana Jones): We’re doing the work, but we don’t have to like it.

The Manufacturing PMI^® reflected U.S. factory activity remaining steady — it even increased 1 percentage point to at 55.5 percent — but the positive data could not have been more belied by respondents’ comments bemoaning the challenges of doing business and sourcing supply. The divergence between data and sentiment, one of the biggest in the history of the ISM^® PMI^® Reports, has been discernable nearly all year.

Quite the comments section for the October ISM Manufacturing PMI. The first one starts with: "'Negative, inflation, in the red’ are the three words or phrases that best describe our strategic sourcing for 2026." https://t.co/489JSy2iQv

— Kevin Gordon (@KevRGordon) November 2, 2026

In October, general sentiment worsened for a third consecutive month, with 34 percent of the comments positive and 66 percent negative as tariffs, the Iran war, inflation frustration and slower supplier delivery performance kept supply managers and executives in a funk.

“In the 10th month of expansion, we are encouraged with new orders, new export orders and production continuing to improve,” Susan Spence, MBA, the Chair of the Institute for Supply Management^® (ISM^®) Manufacturing Business Survey Committee, told a conference call of reporters on Monday. “But we’re sensitive to the loss of growth in employment and the backlog drop, as well as the continued pricing volatility. So, you get the increase in negativity.”

According to a review by Kristina Cahill, ISM Research Manager and PMI^® Reports Analyst, the current chasm between Manufacturing PMI^® data and sentiment could be as wide and lasting as ever. (The Manufacturing report traces its roots to 1931; Services data collection began in 1997.) However, there were other such gaps during the coronavirus pandemic recovery.

In November 2021, the Manufacturing PMI^® was 60.8 percent and the Services PMI^® 67.5 percent, but panelists emphasized operating strains due to shortages and rising costs. Both composite indexes were in expansion in June 2022, but demand worries were rampant amid spending hesitancy, slowing orders and excess inventories.

Still, the current landscape “is unusual,” Spence said. “When you see the (index) numbers and start reading the comments, you could scratch your head.”

She added, “Here’s what I noticed for second month in a row: Even the positive comments have negativity to them. So, if someone writes that sales are expanding, but all these challenges remain, I’m counting it as positive comment, but there’s negativity in there. So, (the sector is) in expansion. You don’t dismiss that. But folks are very, very worried.”

In a stable month — the largest index movement in either direction was 2.8 percentage points — each of the five subindexes that feed into the PMI^® (New Orders, Production, Employment, Supplier Deliveries and Inventories) expanded. Buoyed by recent new orders and backlogs growth, the Production Index (59 percent) hit its highest level since November 2021.

October ISM Manufacturing PMI rose to 55.5 vs. 54.5 est. & 54.5 prior … new orders up to 55.5 vs. 55.3 prior; prices paid down to 75.2 vs. 77.9 prior… employment down to 52.4 vs. 52.7 prior https://t.co/Dtbb4mMjqm

— Liz Ann Sonders (@LizAnnSonders) November 2, 2026

The one subindex not in expansion — the Customers’ Inventories Index — registered 41.6 percent, a “too low” status that is generally considered a positive for future production. The index measures the amount of product on shelves, and if it’s low, reorders should be imminent.

But the Customers’ Inventories Index has been in the low 40s for some time, despite continuing new orders growth. Spence points out that the index has had a “too low” classification for 25 straight months — the same length of time the Prices Index has been in expansion (or “increasing”) territory. In October, the Prices Index registered 75.2 percent, the ninth straight reading above 70 percent.

“I think if prices (were lower) and volatility more neutral, I’d probably scratch my head a little bit more on why customers aren’t ordering,” Spence said. “New orders are in expansion, so they are ordering. It feels like they are ordering the minimum of what they have to.”

So, it’s likely that panelist anxieties will continue, with the Iran war in its ninth month, no apparent off ramps for other geopolitical conflicts, tariffs still a headache and wonder of just how much of the manufacturing expansion and overall U.S. economic growth is due to an AI buildup (and how long it will last).

It’s easy to think about the what-ifs, Spence said.

“I remain convinced that we are getting held back from a bigger push in expansion,” she said. “Despite all these issues going on, we’re in expansion. So, I can only wonder if the (Iran) war was over and other things resolved, would the floodgates open?”

The ISM^® PMI^® Reports roundup:

Barron’s: The Manufacturing Economy Is Growing, But So Are Headwinds. “Despite all the headwinds, the U.S. manufacturing economy has growth for 10 consecutive months. The sector has added jobs for four consecutive months. Things are improving, but there are clouds gathering, including high interest rates, high energy prices, and high inflation.”

Bloomberg: U.S. Manufacturing Activity Accelerates as Production Picks Up. “Factories are benefiting from strong economic growth, resilient consumer demand and solid business investment. The US economy expanded in the third quarter at the fastest pace in a year, bolstered by business outlays on data centers and artificial intelligence, as well as industrial and other equipment.”

CNBC: October ISM Manufacturing PMI^® Comes In at 55.5%, Beating Estimates. “We were looking at 54.5 percent, and it came in at 55.5 percent, so that’s a good number,” analyst Steve Liesman said. “Still elevated on the (Prices Index) — that is, these days, the second-most important number. It came in at 75.2 percent. … It looks like there is some manufacturing going on in this country, but I’m not sure how much of this is picking up because of data centers. There’s a debate about that.”

Manufacturing Dive: Manufacturing Expands for 10th Straight Month, but Iran War Weighs Heavily. “The Iran war and price volatility continue to weigh down the manufacturing sector despite 10 months of expansion, Susan Spence, Chair of ISM’s Manufacturing Business Survey Committee, said on a call Monday. According to Spence, more respondents expressed concern about prices and other issues this month than in September.”

MarketWatch: Booming U.S. Manufacturers Can’t Keep Up With Demand — and High Inflation Isn’t Helping. “An AI boom has powered the rebound in manufacturing, but the lingering effects of the Trump tariffs, high oil prices tied to the Iran war and difficulty obtaining supplies have removed some of the shine.”

US MANUFACTURING ISM'S SPENCE Q&A: EVEN POSITIVE COMMENTS HAVE NEGATIVE ASPECTS; 'FOLKS ARE VERY, VERY WORRIED;' CUSTOMERS FACING PRICE PRESSURE #ISM #manufacturing #economy #Spence

— Mace News (@MaceNewsMacro) November 2, 2026

Reuters: U.S. Manufacturing Strengthens in October, Input Prices Stay High. “(S)entiment among manufacturers remained overwhelmingly downbeat. ... They were likely referring to rising prices for a range of ‌commodities including energy, stemming from the ongoing US-Israeli war with Iran. A recent escalation in the trade war with Canada was also cited by manufacturers as a constraint.”

The ISM^® Services PMI^® Report will be unveiled on Wednesday. For the most up-to-date content on the ISM^® PMI^® Reports, use #ISMPMI on X, formerly known as Twitter.

(Photo credit: Getty Images/Gerenme)