U.S. Manufacturing Growth Slows but Remains Positive
Randy Wolken, President & CEO

In September, the S&P Global U.S. Manufacturing Purchasing Managers’ Index (PMI®) signaled continued growth in the manufacturing sector, though at a slower rate compared to previous months. The headline PMI registered 52.0, down from 53.0 in August, suggesting a weaker but still positive expansion rate. Any reading above 50 indicates growth, meaning the manufacturing industry continues to expand, though momentum is cooling.

The survey showed nationally that while manufacturers continue to see gains in production and new orders, both areas grew at a reduced pace. Production growth slowed, reflecting softer demand conditions, while new order growth weakened due to persistent global trade challenges and the impact of tariffs. Although orders increased for the ninth straight month, they did so only modestly, marking a rate below the survey’s long-term average. In particular, export demand fell for the third consecutive month, as tariffs continued to suppress sales to key trading partners such as Canada and Mexico.

Despite these challenges, manufacturers remain cautiously optimistic about the future. Many firms expect that reshoring trends—bringing production back to the U.S.—and stronger domestic demand will boost business conditions in the year ahead. However, this optimism is tempered by ongoing policy uncertainty, which clouds investment and hiring decisions, and cost pressures remain a significant issue.

Tariffs have been a major contributor to increased input costs, leading to another month of elevated purchasing prices. Companies have tried to pass some of these costs on to customers, but competitive pressures and signs of weaker demand have limited their ability to raise prices. As a result, output charge inflation—the rate at which producers increase prices—fell to an eight-month low. This balancing act between rising input costs and restrained selling prices has put additional strain on profit margins across the sector.

Employment trends, however, showed more encouraging signs. Firms expanded their workforces to fill vacancies and support business growth, which helped reduce backlogs of uncompleted work. Outstanding workloads declined at the fastest rate in five months, partly because increased labor capacity allowed companies to keep up with demand. Inventory levels also rose for the second month in a row, as production growth slightly outpaced new orders. Some firms built up stocks of finished goods in anticipation of stronger future demand or to buffer against supply chain uncertainties that have characterized the manufacturing landscape in recent years.

Overall, the September data paints a picture of a resilient but challenged U.S. manufacturing sector. Growth continues, but at a slower and more uneven pace. Firms are contending with higher costs, trade disruptions, and fluctuating demand, yet many still express confidence that domestic opportunities and reshoring initiatives will strengthen conditions over time. The coming months will likely reveal whether continued policy and tariff pressures further weigh down the pace of industrial recovery or whether manufacturers will adjust and continue to grow.