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Manufacturing PMI Update: Is the Factory Sector Growing or Shrinking?

Manufacturing PMI Update: Is the Factory Sector Growing or Shrinking?

ATN BREAKING NEWS |

Manufacturing PMI Update: Is the Factory Sector Growing or Shrinking?

October 19, 2026 | ATN Trade & Finance

North American factory activity stayed in expansion territory in September, but the details tell very different stories across borders — with strong US growth accompanied by the hottest input-price reading in years, Canada slowing, and Mexico barely clawing back above the contraction line.

United States: Strong Growth, Alarming Prices

The US factory sector powered through September by both measures. The ISM Manufacturing PMI came in at 54.5 — essentially flat with August's 54.6 and in expansion territory for a fifth consecutive month. New Orders rose to 55.3 (from 53.7), employment improved to 52.7 (from 51.2), and the breadth of expansion held. The one alarming reading was Prices Paid, which jumped to 77.9 from 71.1 in August — well above the 72.3 consensus and the highest since March 2026. Some 58.6% of respondents reported higher raw-material costs, with the surge tied largely to Brent crude trading in the $108–$113 range following the Hormuz conflict. A level near 78 is consistent with broad cost pass-through and will complicate any case for Fed patience on rates.

The S&P Global US Manufacturing PMI confirmed the picture at 55.9 (final), revised down modestly from the 57.0 flash estimate but well above August's 53.9 — the best reading since May 2022. Prices paid hit 66.4, the highest since October 2022, and supplier delivery times lengthened to their worst since July 2022. Chris Williamson, chief business economist at S&P Global Market Intelligence, described it as a "worrying combination of robust demand and worsening supply chains." The broader S&P Global US composite PMI hit 58.4 — its highest since July 2021 — consistent with an Atlanta Fed GDPNow estimate near 5.1% annualized growth.

Canada: Still Expanding, But Slowing

The S&P Global Canada Manufacturing PMI slipped to 51.5 in September, below the 52.9 consensus and down from 53.0 in August. Manufacturing remains in expansion for now, but the deceleration is notable against a backdrop where Canada's overall composite PMI fell to 48.7 — its fourth consecutive monthly contraction — as the services side of the economy continued to shrink.

Mexico: Marginal Return to Growth

The S&P Global Mexico Manufacturing PMI edged up to 50.3 from 49.8 in August — a technically positive reading, but barely. Output continued to decline for a 27th consecutive month, export orders fell for the third straight month on weaker demand from Europe and the US, and employment declined again. Backlogs of work rose for the first time in eight months, offering a tentative demand signal, but business sentiment, while at its best since November 2025, remains below its long-run average.

What this means: The US factory sector is expanding firmly, but the September price data — ISM Prices Paid at 77.9, S&P Global at 66.4 — add upward pressure to an already-above-target inflation picture heading into the October 28 Fed decision. Canada is decelerating. Mexico's return above 50 is statistically significant but operationally thin; until output and export orders turn, the headline number overstates the health of Mexican manufacturing.

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