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

October 20, 2026 | ATN Trade & Finance

The short answer for September 2026 is: growing, and in some cases accelerating — but with inflation signals that are complicating the picture for central banks and supply chain managers alike.

US: Two Surveys, Both Pointing Up

The two main US manufacturing gauges both registered expansion in September, released October 1.

The ISM Manufacturing PMI came in at 54.5 — a slight dip of 0.1 from August's 54.6 and marginally below the 55.0 consensus, but the headline number understates the internal momentum. New orders surged to 55.3 (up from 53.7), and employment rose to 52.7 (up from 51.2), both beating expectations. The concerning figure was Prices Paid, which jumped to 77.9 from 71.1 in August — the highest since March's 78.3 and well above the 72.3 forecast. With 58.6% of respondents reporting higher input costs and just 2.8% reporting decreases, cost pressures are running hot. Analysts tied the spike directly to elevated Brent crude and tariff-driven input costs.

The S&P Global US Manufacturing PMI told an even stronger story: 55.9, up from 53.9 in August and the highest reading since May 2022. Output has now grown for 16 consecutive months. Backlogs rose for a seventh straight month, supplier delivery times stretched to their longest since August 2022 (shortages cited in steel and electronics), and firms built inventories for a sixth consecutive month. New export orders, however, fell for the 15th consecutive month — a persistent drag that S&P Global chief economist Chris Williamson attributed to tariffs and higher shipping costs. Williamson noted that demand is outstripping supply and said the combination of strong growth, hiring, and elevated prices "would fuel speculation about another rate hike from the FOMC."

Global: 55-Month High, Led by US, India, and China

The J.P.Morgan Global Manufacturing PMI hit 53.0 in September — up from 52.3 in August and the highest reading in 55 months — extending the global expansion streak to 14 consecutive months. The Output PMI reached 53.8, the strongest since July 2021. New orders posted their steepest gain in 55 months; new export orders grew at the fastest pace in more than five years. Employment reached a 52-month high.

Regionally, the US, India, Ireland, Netherlands, and Taiwan all posted their fastest expansions in the covered period. Japan registered modest but historically significant growth. Mainland China recorded one of its strongest readings since the pandemic. Input costs and output prices both accelerated globally — a coordinated inflationary signal from the factory sector.

Canada and Mexico: Expanding, but Losing Steam

Canada's S&P Global Manufacturing PMI slipped to 51.5 in September, down from 53.0 in August and below the 52.9 forecast. Growth continues, but the slowdown reflects the drag of the ongoing US-Canada trade conflict and its effect on cross-border orders.

Mexico edged into expansion at 50.3, up from 49.8 in August — technically the right side of the ledger, but fragile. Output fell for a 27th consecutive month, employment declined, and supplier delays hit a four-year worst, attributed to highway blockades, security disruptions, and Middle East shipping disruption. S&P Global economist Pollyanna De Lima described conditions as "still quite fragile." Mexico's IMEF manufacturing indicator landed at exactly 50.0, confirming the sector is at stall speed.

What this means: Global manufacturing is growing, but the inflation embedded in factory input costs — especially in the US — is working against any near-term monetary easing. For importers, the US data showing strong domestic demand alongside falling export orders reflects a split: American factories are selling at home but facing tariff headwinds on outbound goods. Mexico's output contraction streak, now in its 27th month, is a real operational signal for manufacturers using Mexico as a production base; the supplier delay issue specifically warrants review of logistics routing.

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

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

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