US Manufacturing Expands for a 10th Month as PMI Rises to 55.5 in October

US manufacturing expanded for a 10th straight month in October. The Institute for Supply Management Manufacturing PMI registered 55.5 percent in October 2026, up 1 percentage point from 54.5 percent in September, the ISM reported on Monday, November 2.

The reading beat expectations. Economists polled by Reuters had forecast 54.5, and economists surveyed by FactSet also expected 54.5, Barron's reported. Reuters noted the PMI has stayed above the 50 threshold this year, indicating growth in manufacturing, which accounts for about 9.4 percent of the US economy. The October reading also marked the 24th straight month of expansion for the overall economy. ISM said 55.5 corresponds to a 2.7 percent increase in real GDP on an annualized basis, on the past relationship between the PMI and the overall economy.

"In October, U.S. manufacturing activity remained in expansion territory," said Susan Spence, chair of the ISM Manufacturing Business Survey Committee.

Production hits its highest since 2021

Production did the heavy lifting in October. The Production Index rose to 59.0 percent, up 2.3 percentage points from 56.7 percent in September, its highest reading since November 2021, when it was 60.5 percent.

Orders held close to the headline pace. The New Orders Index registered 55.5 percent, up 0.2 percentage point from 55.3 percent in September, expanding for the 10th consecutive month. The Backlog of Orders Index fell to 54.6 percent from 56.4 percent, the Supplier Deliveries Index rose to 59.1 percent from 59.0 percent, and the Inventories Index returned to expansion at 51.4 percent, up from 48.6 percent. New Export Orders rose to 51.2 percent and Imports rose to 52.9 percent.

Costs stay high, hiring holds

Prices eased but stayed high. The Prices Index fell to 75.2 percent, down 2.7 percentage points from 77.9 percent in September, but it remained in increasing territory, which means factory input costs stayed high.

Employment softened a little and stayed in expansion. The Employment Index registered 52.4 percent, down 0.3 percentage point from 52.7 percent in September. Reuters noted it was slightly above the economists forecast of 52.0.

Twelve manufacturing industries reported growth in October, including Machinery, Computer and Electronic Products, Transportation Equipment, Chemical Products, and Food, Beverage and Tobacco Products. Three industries reported contraction: Printing and Related Support Activities, Paper Products, and Nonmetallic Mineral Products.

Sentiment gets worse for a third month

The survey comments told a cooler story than the headline numbers. General sentiment deteriorated for a third month in a row, with 34 percent of comments positive and 66 percent negative. Among the negative comments, pricing volatility was mentioned in 62 percent, longer lead times in 41 percent, tariffs in 25 percent and the Iran war in 21 percent.

A second survey pointed the other way on momentum. Sharecast reported the separate S and P Global US manufacturing PMI eased to 54.9 in October from 55.9 in September, still marking a 15th straight month of expansion, but a softer signal than the ISM survey.

Barron's added a market note: the ISM report does not typically move stocks much unless something unexpected happens. October gave factories a stronger headline, with production at a five year high, and a warning underneath it, with sentiment falling for a third month and input prices still at 75.2.