US Manufacturing PMI Hits 55.5 in October, 10th Straight Month of Growth

US manufacturing expanded for the 10th consecutive month in October, with the Institute for Supply Management's PMI reading 55.5 — up 1.0% from September and 2.7% above the trailing 12-month average of 52.8. Any reading at or above 50 signals growth, and October's pace of expansion accelerated even as tariffs, inflation and the Iran conflict dominated panelist concerns.

The October figure sits just 0.1 point below July's 55.6, which was the highest monthly reading since May 2022's 55.9. ISM also noted the overall economy has now grown for 24 consecutive months.

For freight markets, the sub-indices carry the real signal. Production surged to 59.0, up 2.3% from September — its highest level since November 2021's 60.5 — and grew for the 12th straight month across 11 sectors. Supplier Deliveries came in at 59.1, with readings above 50 indicating slower deliveries; deliveries slowed at a faster rate for the 11th consecutive month, with 12 of 18 sectors reporting longer lead times.

What do the October numbers show?

• New Orders: 55.5, up 0.2%, growing for the 10th consecutive month
• Production: 59.0, up 2.3%, highest since November 2021
• Employment: 52.4, down 0.3%, a fourth month of growth after 32 months of contraction
• Supplier Deliveries: 59.1, slowing at a faster rate for the 11th consecutive month
• Inventories: 51.4, up 2.0%, returning to growth
• Customers' Inventories: 41.6, flat and 'too low' for the 25th consecutive month
• Prices: 75.2, down 2.7%, rising for the 25th consecutive month across 16 sectors
• Backlog of Orders: 54.6, growing for the 10th consecutive month

Twelve manufacturing sectors expanded in October, down from 15 in August, led by Plastics & Rubber Products, Electrical Equipment, Machinery, Computer & Electronic Products and Transportation Equipment. Only three contracted: Printing & Related Support Activities, Paper Products and Nonmetallic Mineral Products.

The combination of rising production, slowing deliveries and customer inventories sitting too low for over two years points to continued replenishment demand across trucking and intermodal networks — provided components keep flowing.

Why are prices still the sore spot?

The Prices index at 75.2, even after easing 2.7%, remained in expansion territory for the 25th consecutive month, with 16 sectors reporting higher input costs. A Chemical Products panelist framed the 2026 outlook bluntly: "'Negative, inflation, in the red' are the three words or phrases that best describe our strategic sourcing for 2026."

That panelist said annual cost increases have run above 6% this year against a typical 2% to 3% assumption, with 24 of 39 tracked items higher, nine lower and six neutral. "U.S. economic policy has suffered another year, making it impossible to make sound long-term decisions," the panelist said.

A Miscellaneous Manufacturing panelist flagged a pressure point directly relevant to capacity markets: any commodity consumed by AI and data-center buildouts is in a supply-and-pricing crunch. "We keep wondering when the madness will stop," the panelist said, adding that annualizing the combined impact of tariffs, AI-driven commodity inflation and geopolitically influenced price increases makes next year's budget planning "sobering."

What does ISM's committee chair see ahead?

Susan Spence, chair of ISM's Manufacturing Business Survey Committee, called the numbers solid despite persistent concerns. "Production hit its highest level in five years, which is good, but driven by lead-time issues, and prices remain very high, even though the reading showed improvement," Spence said.

She noted the pain of demand outrunning capacity: "It is especially hurtful when some of these industries see business coming back and they cannot fulfill it." On employment, Spence said the slight dip does not appear to be a major concern, with the panelist hiring-to-firing ratio improving to 1.80-to-1 in October.

"With expansion happening, it remains a good story overall, but you cannot ignore the high prices," Spence said, citing the ongoing Iran conflict, the timing of the AI buildout and trade policy as the swing factors ahead.

With midterm elections the following day, gasoline prices, tariffs and inflation remained intact as voter-level economic concerns, and Spence cautioned those dynamics make confidence hard to sustain. For shippers and carriers, the October data points to firm industrial freight demand into year-end — paired with input costs and supplier lead times that show no sign of easing soon.