ISM Manufacturing PMI — October 2025
Headline: The Manufacturing PMI fell 0.4 point to 48.7, indicating contraction for the eighth consecutive month, with the rate of contraction faster than in September. The reading matches its trailing six-month average of 48.7 and remains within the 48.0–49.1 range. Manufacturing remained below its 50.0 breakeven, although the broader economy was still growing: 48.7 is above the economy-wide breakeven of 42.3.
Sub-indices:
| Index | Level | Prior | Change | Direction | vs 6-mo |
|---|---|---|---|---|---|
| New Orders | 49.4 | 48.9 | +0.5 | Contracting | above avg (48.1) |
| Production | 48.2 | 51.0 | -2.8 | Contracting | below avg (48.3) |
| Employment | 46.0 | 45.3 | +0.7 | Contracting | above avg (45.1) |
| Supplier Deliveries | 54.2 | 52.6 | +1.6 | Slowing | above avg (53.1) |
| Inventories | 45.8 | 47.7 | -1.9 | Contracting | 6-mo low |
| Customers' Inventories | 43.9 | 43.7 | +0.2 | Too Low | below avg (45.2) |
| Prices | 58.0 | 61.9 | -3.9 | Increasing | 6-mo low |
| Backlog of Orders | 47.9 | 46.2 | +1.7 | Contracting | 6-mo high |
| New Export Orders | 44.5 | 43.0 | +1.5 | Contracting | above avg (44.4) |
| Imports | 45.4 | 44.7 | +0.7 | Contracting | below avg (45.5) |
Key moves:
- Production fell 2.8 points, crossing from expansion in September (51.0) into contraction at 48.2, and moved below its six-month average.
- Manufacturers’ inventories dropped to 45.8, a six-month low, while Backlog of Orders rose to a six-month high of 47.9.
- Prices declined 3.9 points to 58.0, also a six-month low, though input costs continued to increase.
Insights:
- The demand picture improved at the margin but remained soft: New Orders rose to 49.4, still below 50, while Backlogs improved to 47.9 and reached a six-month high. This combination points to a modestly better forward pipeline, but not yet to sustained production growth.
- The decline in manufacturers’ inventories does not signal an involuntary buildup. With New Orders improving, Backlogs rising and customers’ inventories at 43.9 (“too low”), the inventory drawdown is consistent with lean channel stocks and potential future replenishment demand.
- Supplier Deliveries rose to 54.2, indicating slower deliveries. In the context of contracting output, this is a demand-positive or supply-constraint signal rather than evidence of slack, although the data do not distinguish between the two.
- Employment improved 0.7 point to 46.0 but remained in contraction for the ninth month, so the production setback continues to be accompanied by net manufacturing job shedding.
- Prices remained elevated at 58.0, implying ongoing input-cost pressure, but the six-month low and 3.9-point decline indicate meaningful easing in goods-inflation and margin pressure relative to recent months.
Breadth & prices: Six industries reported growth—Primary Metals; Food, Beverage & Tobacco Products; Transportation Equipment; Plastics & Rubber Products; Fabricated Metal Products; and Nonmetallic Mineral Products—and none were listed as contracting. Input prices continued to increase, though the Prices index eased to 58.0.
Takeaway: October’s print depicts a manufacturing sector still in a shallow, eight-month contraction, with production weakening and employment remaining soft. Improving orders and backlogs, lean customer inventories and easing price pressure