Unfilled orders at U.S. factories climbed 0.6% to $1,609.6 billion in August, the Census Bureau said in its Oct. 2 Manufacturers' Shipments, Inventories and Orders report — the 25th increase in 26 months. Transportation equipment alone accounted for $1,009.9 billion of that pile and led the monthly jump.

Shipments stalled at $658.6 billion, the first flat print after eight straight monthly gains. New orders edged up 0.1% to $663.5 billion. The ratio of unfilled orders to shipments — a forward-looking pressure gauge for capacity planning — widened to 6.87 from 6.81. Census does not adjust the figures for inflation.

What is driving the cost surge?

ISM's manufacturing PMI registered 54.5 in September, a tenth of a point below August, the group said in its Oct. 1 report. The prices index surged 6.8 points to 77.9, the largest single move anywhere in the survey. ISM said 58.6% of respondents reported paying higher prices, up from 46.2% in August. No commodity was reported down in price.

"The Prices Index reading is still being driven by (1) increases in steel and aluminum prices that impact the entire value chain, (2) tariffs applied to many imported goods and (3) increases in petroleum-based products as a result of the Middle East conflict," said Susan Spence, chair of ISM's Manufacturing Business Survey Committee.

Freight appeared on ISM's up-in-price list for a seventh straight month. Diesel was on it for a second. The EIA's weekly benchmark diesel — the figure most fuel surcharges track — set a record of $6.529 a gallon on Sept. 21.

A food, beverage and tobacco respondent told ISM that "fuel costs are still affecting transportation costs and the overall cost of goods." A machinery respondent said higher interest rates are slowing new construction and that "we also have to face up to the higher cost of components from overseas due to tariffs and freight rates."

How tight is the supply side?

ISM's inventories index fell 2 points to 48.6 in September, back in contraction. The customers' inventories index slipped to 41.6 — a 24th straight month in "too low" territory. "A 'too low' status for the Customers' Inventories Index is usually considered positive for future production," Spence said.

A fabricated metal products respondent told ISM the company has orders through year-end above forecast. "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."

What is the Canada tariff fallout?

August trade data predate Canada's retaliation. The U.S. goods deficit with Canada widened $4.1 billion to $7.1 billion as imports from Canada rose $4.6 billion to $37.1 billion, Census and the Bureau of Economic Analysis said. Ottawa put retaliatory tariffs of 15% to 50% on about C$27.6 billion in U.S. goods on Sept. 8, matching U.S. duties after talks broke down in August.

"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," a machinery respondent told ISM. That respondent said orders and delivery times had both doubled in semiconductors, electronics and government work.

A transportation equipment respondent added: "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."

What does the import picture show?

• Goods imports rose $17.2 billion to $342.2 billion in August
• Goods deficit widened $12.8 billion to $136.6 billion
• Industrial supplies accounted for $9.1 billion of the import increase
• Crude oil: up $3.3 billion; nonmonetary gold: up $3.1 billion
• Capital goods imports rose $6.2 billion, including $2.4 billion in semiconductors
• Real goods imports, in 2017 dollars, rose 4.1% to $267.7 billion against a 5.4% nominal gain

Year-to-date, the goods and services deficit sits 19.9% below the same period in 2025. Total imports are up 4.4%.

What's next?

Backlogs have piled up in 25 of the last 26 months. The prices index just posted its biggest monthly jump in the September survey. Steel, diesel and Canadian retaliatory tariffs all stack on top of freight rates already up seven months running — and shippers bracing for 2026 contract talks will see those inputs land in every line item.