Input prices up 24 months, increasing faster.
Please consider the September 2026 ISM® Manufacturing PMI® Report
The report was issued today by Susan Spence, MBA, Chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee.
“The Manufacturing PMI® registered 54.5 percent in September, 0.1 percentage point below the August figure of 54.6 percent. The overall economy continued in expansion for the 23rd month in a row. (A Manufacturing PMI® above 47.5 percent, over a period of time, generally indicates an expansion of the overall economy.) The New Orders Index expanded for the ninth consecutive month after four straight readings in contraction, registering 55.3 percent, up 1.6 percentage points compared to August’s figure of 53.7 percent. The September reading of the Production Index (56.7 percent) is 1.6 percentage points lower than the 58.3 percent recorded in August. The Prices Index remained in expansion (or ‘increasing’ territory), registering 77.9 percent, a notable increase of 6.8 percentage points compared to August’s reading of 71.1 percent. The Backlog of Orders Index registered 56.4 percent, up 4.6 percentage points compared to the 51.8 percent recorded in August. The Employment Index reading of 52.7 percent is up 1.5 percentage points from August’s figure of 51.2 percent,” says Spence.
“In September, U.S. manufacturing activity remained in expansion territory. Of the five subindexes that make up the PMI®, only New Orders and Employment grew faster than the previous month. In September, 40 percent of the comments were positive and 60 percent negative, with a 1-to-1.6 ratio of positive to negative sentiment. Among negative comments, pricing volatility was mentioned in 46 percent, tariffs 34 percent, the Iran war 30 percent and increasing lead times 21 percent; most comments mentioned multiple factors.
Key ISM Points
- New Orders Growing
- Production Growing
- Employment Growing
- Prices Increasing
- Imports Growing
- Exports Growing
Respondent Comments (Emphasis Mine)
- “Better performance was driven primarily by temporary market effects, including (1) geopolitical uncertainties, (2) customers bringing forward purchases, (3) delayed raw material price increases and (4) reduced competitor capacity. However, these factors do not signal sustained recovery: Structural challenges facing the chemical industry remain, including overcapacity, persistent pricing pressures and protectionist trade policies.” [Chemical Products]
- “Supply chain performance has improved compared to prior years, with lead times largely normalized. Cost pressures persist in select raw materials, transportation and labor categories, requiring continued focus on supplier management and cost control. We remain cautiously optimistic about business conditions over the next several quarters.” [Chemical Products]
- “The U.S. tariff schedule is providing challenges. Finding alternate sources of supply outside of China, local pushback on data centers in the U.S. and continuing material/component shortages are affecting business.” [Computer & Electronic Products]
- “Manufacturing activity remains stable, with a continued focus on cost optimization, supplier negotiations and supply base consolidation. We are actively evaluating alternative sources in several categories to improve supply resilience and reduce costs. While material availability has generally improved compared to prior periods, qualification requirements and supplier capacity constraints continue to influence sourcing decisions for certain critical materials and components. Capital and operational spending remain focused on productivity, efficiency and transformation initiatives.” [Computer & Electronic Products]
- “Orders have doubled yet again, and delivery times have also doubled, in the semiconductor, electronics and government sectors, with remaining sectors flat to down. Coupled with supply chain lead times and pricing pressures, the factory backlog has nearly doubled. Canada tariffs have impacted cross-border costs and left our supply chain team scrambling — those supply chains took years to develop and nurture — hurting the very lead times government buyers are concerned about.” [Machinery]
- “Order levels remain strong and elevated; we have orders through year-end at above forecast levels. Our biggest challenge continues to be a severe shortage of workers, limiting our production output to meet demand. The second challenge is general availability of steel; the market is getting worse, and more production delays are expected as we gap out of needed material.” [Fabricated Metal Products]
- “Raw metals continue to be challenging, especially with the uncertain nature of tariffs being on and off again. New tariffs against Canada have drastically increased costs for capital expenses as well as assemblies.” [Electrical Equipment, Appliances & Components]
- “Fuel costs are still affecting transportation costs and the overall cost of goods. Beef costs remain high, with no relief in sight.” [Food, Beverage & Tobacco Products]
- “Higher interest rates slow down the growth of new construction projects; we also have to face up to the higher cost of components from overseas due to tariffs and freight rates. Due to booming demand of AI and data centers, domestic steel capacity has been stretched and pushed. Higher steel costs each month increase our raw-material and finished-goods costs.” [Machinery]
- “Every month, we are faced with new headwinds created by this administration. This month, it is the trade war with Canada, which every day is getting worse — causing prices to go up and uncertainty that creates massive disruption. Buying continues to get pushed out indefinitely as customers don’t want to spend on capital expenditures until there is more certainty of costs and demand. The only thing that is predictable is the chaos that is created by these trade policies.” [Transportation Equipment]
That’s a mixed bag of comments with a lot of complaints about tariffs and pricing.
Commodities Up/Down in Price or in Short Supply
The numbers in parenthesis below are the number of months.
Commodities Up in Price
Aluminum (34); Brass Products; Copper (15); Copper Products (2); Corrugated Products (6); Diesel Fuel (2); Electrical Components (4); Electronic Components (9); Freight (7); Fuel (7); Memory Components (7); Nickel; Oil Based Products (6); Packaging Materials; Plastic Based Products (6); Printed Circuit Boards (3); Resins (8); Semiconductors (4); Soybean Meal; Steel (11); Steel — Hot Rolled (9); Steel — Stainless (8); Steel Products (10); and Zinc.
Commodities Down in Price
None
Commodities in Short Supply
Aluminum Products; Copper (3); Dynamic Random Access Memory (DRAM); Electrical Components (15); Electronic Components (19); Memory (9); Printed Circuit Boards (3); Steel (3); Steel — Hot Rolled; Steel Products; and Tungsten Products (3).
ISM Reported Input Prices
Prices Paid
- Higher: 58.6 percent
- Lower: 2.8 percent
- Net: 55.8 percent
- Up 24 Consecutive Momths
Related Posts
September 25, 2026: Consumer Sentiment Drops in September to Just Above Record Lows
Republican attitudes decline the most, but from higher levels.
September 29, 2026: US Consumer Confidence Plunges to the Lowest Level Since 2014
Views of the present situation and future expectations both declined dramatically.
October 1, 2026: Trade Deficit Surges in 11.5 Percent in August
Tariffs did not and will not eliminate trade deficits.
My company had an upside surprise for August. We more than made up for the slow June and July.
Another high inflation report purporting to mean strong US manufacturing or should I say AI sector expansion as the real driver for manufacturing?
The Trump AI family grift, hyperscaler cutbacks on permitting data centers, diminishing demand by free users of United States AI, ergo more tiered pricing so on its face a better ARPU but only top tier users caused the bump.
China’s demand for permitting data centers increased, free user demand also jumped by over 50%. China’s centralized plan of building out energy projects first, then hyperscalers building out data centers is far superior than US billionaire’s hyperscaler private sector and private energy sector models.
China’s marketing plan is to offer cheaper AI models therefore capturing more AI users is working.
You can count on Trump crashing the national economy and maybe the global economy. Burry was buying puts on AI companies but he’s always too early. I’m looking at puts for late 2027 (maybe Oct). Mostly as a hedge but I’ll start accumulating after the election. It’s entirely possible trump goes full psycho on election and crashes the market a lot sooner.
Do worry, Trump, Walrus, GOP, and democrats will find a way to make things even worse.™
Trump’s war kills 16 trucking companies.
https://www.independent.co.uk/us/money/trucking-companies-bankruptcy-freight-shipping-b3058492.html
More than a dozen American trucking companies have filed for bankruptcy in the past month, according to an industry news report.
Some 16 firms, accounting for more than 250 jobs, have filed for Chapter 7 or Chapter 11 proceedings, FreightWaves reported earlier this month.
Diesel prices, the lifeblood of the trucking industry, hit a record average of $6.53 a gallon on September 22 amid the impact of President Donald Trump’s war with Iran. Diesel has increased $2.76 over the past year, according to motor club AAA.
basically this just reinforces the idea that we have a heated economy but its almost all AI sector related things. this is the entrenched story until one of these ai companies blows sky high.
US jobless claims near 57-year low as layoffs fall in September
https://www.reuters.com/legal/litigation/us-weekly-jobless-claims-fall-layoffs-drop-september-2026-10-01/
thats great but we are still missing 2 million workers from prepandemic and the government is stimulating the hell out of the economy with massive deficits. until the bubble pops the dancing must continue. then we in real trouble
The shortages all look tied to the AI build-out. Nothing indicating true organic growth. The endpoint (if it happens) is millions of unemployed Americans.
I think we may have a command economy, like China. I suspect the US government is creating incentives if not outright forcing the hyperscalers to go down the AI road to nowhere. When this market crashes it will crash hard.
I see they’re selling stocks to buy the long bonds today. Market still operating on the principle of BTFD. That works until it doesn’t.
We’ve had a command economy since ww2 at the latest. After ww1, the military wound down. After ww2, TPTB decided not to.
Ike’s famous speech mentions not only the industrial military complex but also the reach of government into all university research. (H/t James Corbett for discussing that neglected portion of Ike’s speech.). That was 70 years ago.
It’s been true of Japan and Germany too, since ww2. I forget the economist’s name. But some dude explained “we the boj will lend you, manufacturer, a ton of money at low rates, just build more capacity in X” was how things worked in Japan during the 60s and 70s. Most likely decided by their occupiers.
Meanwhile, they tell us “it’s a free market”, “you’re free”, “those other guys are authoritarians”.
Yes, there is competition between local pizza restaurants, until a landlord cartel raises all the rents and only the place serving the shittiest pizza at the highest price can pay it.