U.S. Manufacturing PMI Improves to 49.1 in September, Still Signals Contraction — Evening Brief – 10.01.25
The U.S. ISM Manufacturing PMI rose slightly to 49.1 in September from 48.7 in August, just above the 49.0 consensus estimate, according to data released Tuesday by the Institute for Supply Management (ISM). While the uptick points to a marginal improvement, the index remains below the critical 50 threshold, indicating that manufacturing activity contracted for a seventh straight month. This follows a brief two-month expansion earlier this year, itself preceded by 26 consecutive months of contraction.
Beneath the headline number, the details were mixed. Prices paid eased further to 61.9, down from 63.7 and below the 62.7 estimate, marking the lowest level since February. New Orders fell back into contraction territory, dropping to 48.9 from 51.4, highlighting ongoing weakness in demand. On a more encouraging note, the Employment Index improved to 45.3 from 43.8, beating expectations of 44.3 and offering some reassurance that labor market conditions within the sector are not deteriorating as sharply as feared.
“U.S. manufacturing activity contracted at a slightly slower rate, with production growth the biggest factor in the 0.4-percentage-point gain of the Manufacturing PMI,” said Susan Spence, ISM Chair. Still, she cautioned that the combined declines in New Orders and Inventories outweighed the gains in Production, leaving the improvement “negligible.”
Industry-level results underscored the uneven picture. Five industries reported growth in September — Petroleum & Coal Products; Primary Metals; Textile Mills; Fabricated Metal Products; and Miscellaneous Manufacturing. Meanwhile, 11 industries recorded contraction, led by Wood Products, Apparel & Leather, Plastics & Rubber, and extending across Machinery and Computer & Electronics.
The report suggests that while the manufacturing sector is not in freefall, demand softness and inventory drawdowns remain headwinds, limiting the significance of the headline improvement and keeping the outlook subdued heading into Q4.