U.S. manufacturing activity accelerated in October, extending its expansion to 10 consecutive months, according to the Institute for Supply Management (ISM).
- The Manufacturing PMI jumped to 55.5 from 54.5 in September, beating economists’ expectations of 54.6 and finishing just 0.1 percentage point below its four-year high.
What’s driving growth? Factory production surged to its strongest level since November 2021, while new orders expanded for the 10th consecutive month. Strong demand for artificial intelligence infrastructure, particularly computer and electronic equipment, continues to support manufacturing activity.
Inflation concerns: The Prices Index eased to 75.2 from 77.9, but remained historically elevated, signaling persistent price pressures. Rising energy costs, tariffs and supply-chain disruptions continue to push manufacturing expenses higher.
Employment: The Employment Index slipped slightly to 52.4 from 52.7, although factory hiring remained in expansion territory.
The bottom line: Manufacturing continues to show impressive strength, but inflation remains a major concern. Stronger factory activity combined with elevated input prices could complicate the Federal Reserve’s efforts to contain inflation and keep upward pressure on interest rates.