Manufacturing PMI Update: Is the Factory Sector Growing or Shrinking?
October 15, 2026 | ATN Trade & Finance
The September PMI data paints a sharply divided North American factory picture: the US is in a strong expansion cycle not seen in years, Mexico has barely crossed back into growth territory, and Canada remains stuck in contraction for a fourth straight month.
United States: Ninth Month of Expansion
Both major US manufacturing surveys confirmed solid growth in September. The ISM Manufacturing PMI came in at 54.5% — the ninth consecutive reading above 50, indicating expansion — down fractionally from 54.6% in August. New orders rose to 55.3% (up 1.6 points), production held at 56.7%, and employment improved to 52.7% for a third consecutive month of hiring growth. The most striking sub-index was prices paid: 77.9%, up 6.8 points and marking 24 consecutive months of rising raw material costs — driven by steel and aluminum tariffs, petroleum-based inputs, and Middle East supply disruptions.
The S&P Global US Manufacturing PMI was even stronger at 55.9, up from 53.9 in August and the highest reading since May 2022 (below the flash estimate of 57.0). New orders grew at their fastest pace since April and second-fastest since May 2022. Hiring accelerated at its fastest pace in over five years, though firms reported difficulty finding qualified workers. The main drag: export orders fell again as tariffs and elevated shipping costs weigh on US goods competitiveness abroad.
Canada: Four Straight Months of Contraction
Canada's composite PMI edged up to 48.7 in September from 47.8 in August — still below 50 for a fourth consecutive month, indicating a shrinking private sector. Manufacturing output expanded but at a slower pace than August, while new orders fell across both manufacturing and services. Cost pressures intensified, particularly in the factory sector, reflecting the impact of elevated input costs and trade disruptions. No sector is immune: Canada's escalating tariff dispute with the US is compressing demand on both sides.
Mexico: Barely Back Above 50
Mexico's S&P Global Manufacturing PMI climbed to 50.3 in September, up from 49.8 in August — technically back in expansion but only fractionally. The underlying picture remains difficult: factory output has now contracted for 27 consecutive months, and export sales fell for a third straight month as demand softened in both the US and Europe. Employment continued to decline. The positive signs were narrower: new domestic business orders rose, outstanding backlogs grew at their fastest pace since the start of the year, and business sentiment reached its highest level since November 2025 as firms expressed cautious optimism about future orders and investment.
What this means for manufacturers: The US factory expansion is real and broad-based — nine months of ISM growth is a meaningful streak — but the 24-month price pressure cycle shows no sign of breaking. For Canadian manufacturers, the tariff escalation is compounding an already-weak demand environment. Mexico's near-50 reading masks a structural output contraction that has run more than two years; reshoring-driven nearshoring investment may provide a floor, but it hasn't yet flipped the production trend.
Sources:
- Manufacturing Expands for Ninth Consecutive Month — NAM / ISM
- US Manufacturing Growth Accelerates to Four-Year High — Trading Economics / S&P Global
- Mexico Manufacturing Activity Improves — Trading Economics / S&P Global
- Canada Private Sector Activity Contracts for 4th Month — Trading Economics / S&P Global