US manufacturing expands for nine consecutive months! ISM PMI in September slightly drops to 54.5; new orders increase but cost pressures heat up again

According to information from Zhitong Finance APP, U.S. manufacturing continued to expand in September, although the growth speed slowed slightly. Strong demand and steadily increasing orders continued to support the manufacturing sector. Meanwhile, rising raw material prices and exacerbated supply chain transportation delays indicate that the U.S. manufacturing sector is facing a new round of cost pressures during the recovery process.

Data released Thursday by the Institute for Supply Management (ISM) shows that the ISM Manufacturing Purchasing Managers Index (PMI) for September fell by 0.1 percentage point from August to 54.5, reflecting a slight slowdown in the pace of expansion. However, the index has stayed above the 50 boom-bust line for nine consecutive months, marking the longest period of continuous expansion since 2022.

Looking at specific sub-indices, U.S. manufacturing demand remained robust in September. The new orders index rose further, and the backlog of orders index climbed to its highest level since February this year, showing that manufacturers' order reserves continue to increase, providing support for future production activity. Meanwhile, manufacturing production activity continued to expand, though the pace of expansion has slowed compared to before.

Since emerging from several years of stagnation in early 2026, the overall momentum of recovery in the U.S. manufacturing industry has remained steady. Resilient consumer spending, robust business investment, and government defense expenditure have jointly driven the rebound in manufacturing activities.

Although the Middle East conflicts have increased energy costs and disrupted some shipping routes, at present, rising costs and supply chain bottlenecks have not yet interrupted the momentum of manufacturing expansion.

With orders continuously increasing, U.S. manufacturers have begun expanding recruitment to meet growing production demand. Data shows that manufacturing employment rose for the third consecutive month in September, the longest period of continuous employment growth since 2022. This indicates that, fueled by improved demand, manufacturers remain confident in hiring additional labor.

However, while manufacturing is recovering, cost pressures are accumulating once again.

The ISM report shows that the raw materials price index in September rose to the highest level since May this year, reflecting a further increase in input costs faced by manufacturers. At the same time, supplier delivery times have continued to lengthen. Although delays have eased somewhat compared to before, supply chain operations remain somewhat constrained.

Rising energy prices are a key source of cost pressure for the manufacturing sector. The ongoing conflicts in the Middle East have pushed up energy prices and disrupted some international shipping routes, further increasing the burden on companies in raw material procurement and goods transportation.

This means that although manufacturing demand remains strong, companies need to seek a balance between expanding production and controlling costs. If raw material and shipping costs continue to rise, manufacturers' profit margins may be further affected in the future, adding pressure on companies to pass on costs to downstream customers.

From an industry perspective, the expansion in U.S. manufacturing in September was relatively broad-based.

ISM data shows that 12 manufacturing industries reported growth in September, including electrical equipment, primary metals, and machinery manufacturing sectors. In contrast, industries such as printing and textile mills remain in contraction, indicating that the degree of recovery varies across different manufacturing fields.

Overall, the ISM Manufacturing PMI declined slightly in September, but at 54.5, it remains in the expansion range. Increases in new and backlog orders, as well as sustained employment growth, all indicate that U.S. manufacturing still exhibits considerable resilience.

However, with strong demand coexisting alongside rising costs, the manufacturing recovery is also showing certain inflationary pressures. Against a backdrop of high energy prices and unresolved supply chain bottlenecks, changes in future raw material prices and delivery times will be key indicators for assessing whether U.S. manufacturing can maintain its current expansion momentum.