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Economic warning signs, inflation and rising interest rates be darned, the U.S. manufacturing sector is on a roll and showing no signs of slowing down. In fact, economic activity in the sector expanded for the ninth consecutive month in September, according to the latest ISM Manufacturing PMI Report. The Manufacturing PMI registered 54.5% last month (a reading higher than 50% indicates expansion) as the overall economy expanded for the 23rd month in a row.

Just two industries reported a contraction in September (printing & related support activities and textile mills), while the other 12 manufacturing industries grew, including electrical equipment; primary metals; computer & electronic products; fabricated metal products; miscellaneous manufacturing; and chemical products.

ISM says the New Orders Index expanded for the ninth consecutive month after four straight readings in contraction, registering 55.3% (up 1.6 percentage points compared to August’s 53.7%). Here’s how some of the other ISM indexes performed last month:

• The Production Index (56.7%) was 1.6 percentage points lower than the 58.3% recorded in August. 
  
  
• The Prices Index remained in expansion, registering 77.9%, “a notable increase of 6.8 percentage points compared to August's reading of 71.1%,” ISM reports. 
  
  
• The Backlog of Orders Index registered 56.4%, up 4.6 percentage points compared to 51.8% the prior month. 
  
  
• The Employment Index reading of 52.7% was up 1.5 percentage points from August's figure of 51.2%. 
  
  
• The Inventories Index registered 48.6%, down 2 percentage points compared to August's 50.6%. 
  
  
• The New Export Orders Index lost 2.3 percentage points in September for a reading of 50.9% (versus 53.2% in August). 

“In September, U.S. manufacturing activity remained in expansion territory,” Susan Spence, ISM’s Manufacturing Business Survey Committee chair, said in the report. “Of the five subindexes that make up the PMI, only New Orders and Employment grew faster than the previous month.”

From the Horse’s Mouth

The monthly survey also incorporates feedback and comments from across the manufacturing sector. In September, 40% of those comments were positive and 60% were negative, with a 1-to-1.6 ratio of positive to negative sentiment. Among the negative comments, pricing volatility was mentioned in 46%, tariffs 34%, the Iran war 30% and increasing lead times 21%.

"Better performance was driven primarily by temporary market effects, including (1) geopolitical uncertainties, (2) customers bringing forward purchases, (3) delayed raw material price increases and (4) reduced competitor capacity,” one chemical products manufacturer said. “However, these factors do not signal sustained recovery: Structural challenges facing the chemical industry remain, including overcapacity, persistent pricing pressures and protectionist trade policies."

Another company in the computer and electronics field said it continues to face tariff-related challenges, and that “finding alternate sources of supply outside of China, local pushback on data centers in the U.S. and continuing material/component shortages are affecting business.” An electrical equipment manufacturer echoed those sentiments: “Raw metals continue to be challenging, especially with the uncertain nature of tariffs being on and off again. New tariffs against Canada have drastically increased costs for capital expenses as well as assemblies.”

One machinery manufacturer blamed rising interest rates for slowing the growth of new construction projects and, in turn, impacting its business. “We also have to face up to the higher cost of components from overseas due to tariffs and freight rates,” it added. “Due to booming demand of AI and data centers, domestic steel capacity has been stretched and pushed. Higher steel costs each month increase our raw-material and finished-goods costs.”