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Released November 05, 2025 | SUGAR LAND
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Written by Danny Levin, Deputy Editor for Industrial Info Resources (Sugar Land, Texas)
"In October, U.S. manufacturing activity contracted at a faster rate, with contractions in production and inventories leading to the 0.4-percentage point decrease," Susan Spence, chair of the ISM Manufacturing Business Survey Committee, said in the latest summary of findings for the PMI survey.
"A chain reaction of one-month index improvements started with New Orders in August and flowed to Production in September. In October, it manifested in a 1.7-percentage point increase in the Backlog of Orders Index. These short gains have not appeared to translate into sustained growth for the sector, a reflection of continuing economic uncertainty."
Regarding output, the Production Index was 2.8% lower than September's figure and fell back into contraction territory, and employment slowed.
All four of the PMI's demand indicators--the New Orders, New Export Orders, Backlog of Orders, and Customers' Inventories indexes--improved from September, although they are still showing contraction.
Spence noted the Customers' Inventories Index showed a "too low" status, which usually is "considered positive for future production."
Meanwhile, the Prices Index reached its lowest level since January. "The Prices Index reading continues to be driven by increases in steel and aluminum prices that impact the entire value chain, as well as tariffs applied to many imported goods," she said. But higher prices were reported by 27.3% of respondents in October, down from 32.5% in September and 49.2% in April.
Although some indices showed improvement, tariffs continue to hang over U.S. manufacturing.
That sentiment carried over to the summary of findings. She noted for every comment about new orders, there were 1.7 comments "expressing concern about near-term demand, driven primarily by tariff costs and uncertainty."
Many of the PMI survey panelists indicated tariffs continue to weigh on their business. One from Machinery said, "Tariffs continue to be a large impact to our business. The products we import are not readily manufactured in the U.S., so attempts to reshore have been unsuccessful. Overall, prices on all products have gone up, some significantly."
Another from Computer & Electronic Products said, "The unpredictability of the tariff situation continues to cause havoc and uncertainty on future pricing/cost. But even with the tariffs, the cost to import in many cases is still more attractive than sourcing within the U.S. Challenges with tariffs on production equipment necessary for internal production makes it difficult to justify expansion of capacity."
But some of the panelists could be breathing a sigh of relief. The survey was conducted before the trade agreement between the U.S. and China was announced last week, with main components being the U.S. pausing some of the reciprocal tariffs and China suspending export controls on rare earths.
It's "a great start," Spence said on the media call, but companies will be on the lookout for tariff "whiplash."
"It may take a few months to make sure nothing is undone," she said. "The overall tone (from panelists) is that we don't know what countries coming next or what commodity is coming next. They are saying there has been such volatility and uncertainty that needs to settle down."
About 35% of the spending is attributed to the buildout of data centers.
This includes two major data center campuses that began construction this year: Google's (Mountain View, California) five-building, 1.4 million-square-foot campus in Haskell, Texas, and Quality Technology Services' (QTS) seven-building campus in Cedar Rapids, Iowa. QTS is a subsidiary of Blackstone Incorporated (New York, New York).
Both campuses are expected to consume at least 1 gigawatt of power.
See a full list of reports related to the Google and QTS data center campuses.
About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking more than 200,000 current and future projects worth $17.8 trillion (USD).
Summary
The Institute for Supply Management's (ISM) latest Purchasing Manager's Index (PMI) survey indicates U.S. manufacturing activity contracted for the eighth straight month as tariffs and related uncertainty continue to have an impact.The ISM's Purchasing Manager's Index
The ISM's Purchasing Manager's Index (PMI), which tracks 18 manufacturing sectors in the U.S., registered 48.7% in October--down from 49.1% in September and flat compared with August. Any reading under 50% indicates contraction in the manufacturing economy; the PMI has been below 50% every month since October 2022 except for January and February of this year."In October, U.S. manufacturing activity contracted at a faster rate, with contractions in production and inventories leading to the 0.4-percentage point decrease," Susan Spence, chair of the ISM Manufacturing Business Survey Committee, said in the latest summary of findings for the PMI survey.
"A chain reaction of one-month index improvements started with New Orders in August and flowed to Production in September. In October, it manifested in a 1.7-percentage point increase in the Backlog of Orders Index. These short gains have not appeared to translate into sustained growth for the sector, a reflection of continuing economic uncertainty."
Regarding output, the Production Index was 2.8% lower than September's figure and fell back into contraction territory, and employment slowed.
All four of the PMI's demand indicators--the New Orders, New Export Orders, Backlog of Orders, and Customers' Inventories indexes--improved from September, although they are still showing contraction.
Spence noted the Customers' Inventories Index showed a "too low" status, which usually is "considered positive for future production."
Meanwhile, the Prices Index reached its lowest level since January. "The Prices Index reading continues to be driven by increases in steel and aluminum prices that impact the entire value chain, as well as tariffs applied to many imported goods," she said. But higher prices were reported by 27.3% of respondents in October, down from 32.5% in September and 49.2% in April.
Although some indices showed improvement, tariffs continue to hang over U.S. manufacturing.
Tariffs' Effect on U.S. Manufacturing Activity
"The biggest issue on the panelists' mind continue[s] to be on the tariffs of their supply chains and their cost structures," Spence said on a Monday media call.That sentiment carried over to the summary of findings. She noted for every comment about new orders, there were 1.7 comments "expressing concern about near-term demand, driven primarily by tariff costs and uncertainty."
Many of the PMI survey panelists indicated tariffs continue to weigh on their business. One from Machinery said, "Tariffs continue to be a large impact to our business. The products we import are not readily manufactured in the U.S., so attempts to reshore have been unsuccessful. Overall, prices on all products have gone up, some significantly."
Another from Computer & Electronic Products said, "The unpredictability of the tariff situation continues to cause havoc and uncertainty on future pricing/cost. But even with the tariffs, the cost to import in many cases is still more attractive than sourcing within the U.S. Challenges with tariffs on production equipment necessary for internal production makes it difficult to justify expansion of capacity."
But some of the panelists could be breathing a sigh of relief. The survey was conducted before the trade agreement between the U.S. and China was announced last week, with main components being the U.S. pausing some of the reciprocal tariffs and China suspending export controls on rare earths.
It's "a great start," Spence said on the media call, but companies will be on the lookout for tariff "whiplash."
"It may take a few months to make sure nothing is undone," she said. "The overall tone (from panelists) is that we don't know what countries coming next or what commodity is coming next. They are saying there has been such volatility and uncertainty that needs to settle down."
U.S. Manufacturing Project Activity Remains Strong
Despite the tariffs and any related uncertainty, data from Industrial Info's Global Market Intelligence (GMI) Project Database shows about $500 billion worth of Industrial Manufacturing Industry projects are under construction across the U.S.About 35% of the spending is attributed to the buildout of data centers.
This includes two major data center campuses that began construction this year: Google's (Mountain View, California) five-building, 1.4 million-square-foot campus in Haskell, Texas, and Quality Technology Services' (QTS) seven-building campus in Cedar Rapids, Iowa. QTS is a subsidiary of Blackstone Incorporated (New York, New York).
Both campuses are expected to consume at least 1 gigawatt of power.
See a full list of reports related to the Google and QTS data center campuses.
Key Takeaways
- U.S. manufacturing activity contracted for the eight straight month
- Tariffs and economic uncertainty remain a concern for manufacturers
- All four demand indicators improved month-over-month
About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking more than 200,000 current and future projects worth $17.8 trillion (USD).
