US Manufacturing Expansion Continues Despite Mounting Costs

US manufacturing activity expanded at a slightly slower pace in September as factories balanced robust demand with resurgent costs and shipping delays.

The Institute for Supply Management’s manufacturing gauge fell 0.1 point to 54.5, according to data released Thursday. Factory activity has been in expansionary territory — or over 50 — for nine consecutive months, the longest stretch since 2022.

The September report showed a healthy pipeline of demand. A measure of new orders picked up while a gauge of order backlogs rose to the highest since February. Production expanded, though at a slower pace.

Firms are responding to growing order books by adding workers. Factory headcount expanded for a third consecutive month in September, marking the longest period of employment gains since 2022.

Manufacturers are also navigating rising costs and supply chain bottlenecks. A gauge of raw material prices rose to the highest since May and supplier delivery times continued to lengthen, albeit at a more moderate pace.

The manufacturing sector emerged from a multi-year slump at the start of 2026, buoyed by resilient consumer spending, solid business investment and government outlays on defense.

The Iran war sent energy costs higher and snarled some shipping lanes, though renewed price and supply chain pressures haven’t derailed the sector.

Twelve manufacturing industries reported growth in September, including electrical equipment, primary metals and machinery. Printing and textile mills reported contraction.