5 Nov 2025
Manufacturing activity contracted in October, with the ISM PMI falling below expectations due to significant declines in production and inventories. Businesses are navigating persistent global economic uncertainty, reduced demand, and geopolitical pressures, forcing them to transfer rising costs to consumers while finished goods inventories have reached a one-year low.
The ISM PMI manufacturing data for October was released lower than both the previous month's figure and market forecasts, indicating a general slowdown.
The PMI decreased by 0.4% compared to the prior month, reflecting a notable decline against predictions.
New orders showed an increase, with export orders experiencing a particularly significant rise.
Production saw a substantial decrease of -2.8%, and inventory levels also fell significantly by -1.9%, contributing to the overall decline.
Prices decreased by -3.9%, which is considered a positive development for cost management.
Employment remained stable within the 45-46 range, indicating that businesses have no strong inclination for either layoffs or increased hiring.
The manufacturing sector has experienced 66 months of expansion overall.
The new orders index contracted for the second consecutive month after a brief period of growth.
The prices index, while indicating expansion, exhibits an overall downward trend despite a slight increase from previous declines.
New export orders reported a suitable figure, and the imports index reached 44-45, an increase compared to the previous period.
Manufacturing activity in October contracted at a faster rate, with the contractions in production and inventory being primary factors behind the index's decline.
All four demand indicators—new orders, new export orders, backlogs, and customer inventories—improved, although most still remain below the 50-point threshold.
Customer inventories contracted at a slower rate, indicating a continued but less rapid decline.
Production inputs worsened, and employment contracted at a slower rate, with ongoing management of potential layoffs.
Supplier deliveries contracted at a faster rate, while the prices index increased at a slower pace but still showed an overall rise.
Six industries reported growth: primary metals, food products, beverages & tobacco, transportation equipment, plastic & rubber products, fabricated metal products, and nonmetallic mineral products.
Twelve industries reported contraction, including textiles, apparel/leather, furniture, paper products, wood products, petroleum/coal products, and electrical equipment/appliances/components.
High global economic uncertainty persists, with a constantly changing environment affecting business operations.
Orders are frequently cancelled or reduced, domestic demand has decreased, and businesses are under significant pressure, facing challenges in acquiring capital.
Geopolitical changes, including concerns about tariffs and tensions between the US and China, create uncertainty and risk, impacting the cost and availability of imported products.
Efforts to reshore manufacturing to the US have largely been unsuccessful, as many imported products are not easily produced domestically.
Overall product prices have decreased, some significantly, with businesses initially absorbing costs but eventually forced to transfer them to consumers as profit margins are threatened.
Unpredictable market conditions, government shutdowns, and international tensions contribute to chaos and increased costs for businesses.
Finished goods inventory decreased to its lowest point in a year, which helps mitigate price pressure on producers.
Low customer inventories suggest limited room for increased orders and a significant rebound in production.
Unpredictable market conditions, geopolitical tensions, and widespread economic uncertainty have created a challenging environment for businesses, forcing them to absorb costs initially but ultimately transfer them to consumers as profit margins are threatened.
| metric | value_status | trend | implication |
|---|---|---|---|
| ISM PMI | Below previous and forecast | Contraction | Overall manufacturing slowdown |
| Production | -2.8% decrease | Significant contraction | Major contributor to PMI decline |
| Inventory | -1.9% decrease | Significant contraction | Leads to overall index decline |
| New Orders | Increased overall | Contracted for 2nd month after 1 month growth | Underlying demand not consistently strong |
| Export Orders | Significant increase | Suitable figure | Positive external demand |
| Prices | -3.9% decrease | Overall downward trend (despite slight increase) | Cost relief for producers but transfer to consumers due to pressure |
| Employment | Stable (45-46 range) | No significant hiring or layoffs | Cautious labor market approach by businesses |
| Finished Goods Inventory | Lowest in a year | Decreased | Reduces price pressure on producers, limits future order growth |
| Customer Inventories | Low | Contracted slower, still low | Limited room for increased production orders |
| Global Economic Uncertainty | High | Persistent | Influences business decisions, leads to order cancellations/reductions |
| Domestic Production Efforts | Unsuccessful | Failed | Continued reliance on imports, cost issues, lack of domestic capacity |
| Geopolitical Factors | Tariffs, US-China tensions | High impact | Increased costs, supply chain disruptions, uncertainty |
