The Institute for Supply Management released its monthly manufacturing Purchasing Managers Index (PMI) on Oct. 1, reflecting September U.S. industrial activity, which was slightly above market expectations. 

The PMI — regarded as a key of U.S. industrial health — improved 0.4 percentage points to a reading of 49.1% following an August reading of 48.7%. Even so, it marked the seventh straight month that the PMI was in contraction territory (anything below 50.0%) after a brief expansion in January-February preceded by 26 straight months of contraction.

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ISM PMI – the Last 12 Months

source: tradingeconomics.com

The PMI’s subindex for new orders contracted following one month of growth, down 2.5 percentage points to 48.9%, while production was 3.2 points higher at 51%. Back orders and employment each increased.

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Five manufacturing industries (petroleum & coal products; primary metals; textile mills; fabricated metal products; and miscellaneous manufacturing.) expanded in September, while the other 11 contracted (led by paper products and wood products).

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PMI September Respondent Commentary 

• “Business continues to be severely depressed. Profits are down and extreme taxes (tariffs) are being shouldered by all companies in our space. We have increased price pressures both to our inputs and customer outputs as companies are starting to pass on tariffs via surcharges, raising prices up to 20 percent. The addition of the derivative steel and aluminum tariffs in the middle of the month — with no announcement — was devastating. Interest-rate lowering or the ‘One Big Beautiful Bill’ will not impact our business, as all capital projects are on hold until there is some level of certainty and customers start to place orders for new equipment again. We believe we are in a stagflation period where prices are up but orders are down due to tariff policy, and again, customers are not willing to pay the higher prices, so they are just not buying. Continuing to find ways to reduce overhead, which means letting go of experienced workers.” (Transportation Equipment)
• “The tariffs are still causing issues with imported goods into the U.S. In addition to the cost concerns, product is being held up at borders due to documentation issues. The inflation issues continue; low volumes are a constant concern. The European region is not improving as we had expected, causing further concern for long-term business viability.” (Chemical Products)
• “Ongoing macroeconomic conditions highlighted by interest-rate management and tariffs continue to impact customer purchasing decisions, resulting in subdued production rates and growing cost concerns on direct material and operations.” (Machinery)
• “Lead times have slightly normalized, but tariffs continue to drive additional spend.” (Petroleum & Coal Products)
• “Customer orders are depressed for heavy machinery because tariffs are so impactful to high-end capital equipment. Revenue expectations are flat for the rest of 2025, with no outlook to improve in 2026.” (Electrical Equipment, Appliances & Components)
• “Current business conditions remain volatile, with geopolitical tensions, weather disruptions and shifting trade policies driving uncertainty in agricultural commodities. Oils remain sensitive to biofuel demand and global production. Inflation and evolving consumer trends add further complexity. To manage this, we are emphasizing supplier diversification, long-term contracts and formula-based pricing to balance cost stability with flexibility.” (Food, Beverage & Tobacco Products)
• “The semiconductor industry is being impacted by high tariff prices on parts from Korea, China and Europe. Our industry is at a low point right now as we race to get new nanotechnology in the U.S.” (Computer & Electronic Products)
• “Business is slowing down. Order books are softening as customers push orders out. Seems to be stemming from concerns about the direction of the U.S. economy.” (Plastics & Rubber Products)
• “Tariffs still affecting vast amounts of increases in hardware, Al (artificial intelligence) and stainless steel. MRO (maintenance, repair and operating) products have continually increased, and the slowdown in agriculture has had stark impacts on bottom lines for raw materials.” (Fabricated Metal Products)
• “Steel tariffs are killing us.” (Miscellaneous Manufacturing)