According to the National Association of Manufacturers (NAM), U.S. manufacturing activity contracted at a faster pace in October, continuing a months-long slowdown that reflects ongoing uncertainty around demand, trade, and tariffs. The Institute for Supply Management’s (ISM) Manufacturing PMI fell to 48.7 percent, down from 49.1 percent in September.
While the four key demand indicators—new orders, new export orders, backlog of orders, and customers’ inventories—all improved slightly, they remained in contraction territory. Of the six largest manufacturing sectors, only transportation equipment reported an increase in new orders. Respondents cited concern about softening demand and the impact of tariffs on costs and supply chains.
Globally, manufacturing conditions held steady in October. The J.P. Morgan Global Manufacturing PMI inched up from 50.7 to 50.8, remaining above the growth threshold. Output and new orders rose for the third straight month, supported by stable inventories and lead times. Staffing levels were unchanged for the third consecutive month. However, new export orders continued to fall—declining for the seventh straight month and at a faster pace than September. While manufacturers expect modest gains in output and purchasing, overall business optimism slipped to a six-month low.
In contrast, the S&P Global U.S. Manufacturing PMI rose to 52.5 in October from 52.0 in September. Domestic new orders posted their strongest gain in 20 months, though the increase was concentrated within U.S. markets. Exports declined for the fourth consecutive month, as tariffs weighed on shipments to Canada, China, and Mexico. Meanwhile, production increased, allowing inventories of finished goods to rise for the third straight month—the fastest pace in the survey’s 18-year history. Analysts noted that this buildup could lead to weaker output in the months ahead if demand does not rebound.
Employment data reflected continued caution. According to ADP, private-sector employers added 42,000 jobs in October after shedding 29,000 in September. Goods-producing industries gained 9,000 jobs overall, though manufacturing lost 3,000 positions.
Consumer confidence also weakened. The University of Michigan’s preliminary Consumer Sentiment Index fell for the fourth consecutive month, down 3.3 points to 50.3, the lowest level since spring. Year-ahead inflation expectations edged up to 4.7 percent, while long-run expectations declined to 3.6 percent. Consumers cited concerns over tariffs, job prospects, and the ongoing government shutdown as weighing on the economic outlook.
Despite uneven performance across sectors, manufacturers remain cautiously optimistic that underlying demand and easing supply pressures could stabilize production heading into early 2026.
