U.S. manufacturing activity accelerated notably in September as stronger domestic demand drove a surge in new orders, production and hiring, according to the latest S&P Global US Manufacturing PMI.
The seasonally adjusted PMI rose to 55.9 in September, up from 53.9 in August and marking the strongest reading since May 2022. A reading above 50 indicates an overall improvement in manufacturing activity. The latest data also extend the sector’s current growth streak to 14 months, with the PMI having remained above the 50 mark since August 2025.
The improvement was broad-based, with all five components of the PMI contributing to the increase. New orders and output recorded particularly strong growth, with survey respondents reporting a broad-based improvement in demand. Government and technology-related industries were among those cited as sources of increased sales.
The rise in new orders prompted manufacturers to increase production sharply, extending the current run of output growth to 16 months. Sales growth was also the strongest since April 2026 and the second-strongest since May 2022.
Domestic demand drives growth
New export orders fell for the 15th consecutive month in September, leaving domestic demand to underpin U.S. manufacturing and continue its growth streak since August 2025. Panelists said that international sales continue to face strong headwinds in the form of tariffs and high shipping costs.
The strength of domestic demand also encouraged manufacturers to expand their workforces. The net increase in employment was the largest in more than five years, as companies sought additional capacity to deal with new orders and existing workloads. However, some manufacturers reported difficulties securing suitable labor, highlighting the continuing workforce constraints facing the sector.
Capacity and supply chains remain under pressure
The acceleration in demand is also creating pressure further up the manufacturing supply chain. Backlogs of unfinished work increased for a seventh consecutive month and at the fastest rate since April. Supplier lead times lengthened at their greatest rate since August 2022, with manufacturers reporting shortages of a range of inputs, particularly steel and electronics. Global shipping difficulties and customs delays, particularly at the Canadian border, added to the supply side pressures.
At the same time, tariffs, shortages of key inputs, higher energy and fuel prices, and the war in Iran contributed to a faster increase in manufacturing input costs during September. Manufacturers responded by raising their own selling prices, although the rate of increase in output prices was the weakest since February.
Manufacturers also increased purchasing activity and continued to build inventories of inputs and finished goods. Stocks of purchases rose for a sixth consecutive month, while purchasing activity expanded at its fastest pace since June.
AI investment supports machinery demand
Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, said the September figures showed that U.S. manufacturing growth had “picked up a gear”, with rising new orders driving increased production and hiring.
Williamson pointed to particularly strong investment and production in machinery and equipment, which he said was linked in many cases to rising AI-related spending. He also highlighted increasing order backlogs and supplier activity as evidence of stretched capacity. However, he warned that the combination of accelerating growth, stronger hiring and elevated price pressures would keep inflation in focus, particularly amid high oil prices. Williamson said the data would add to speculation about a possible further rate hike from the Federal Open Market Committee.
Despite the supply chain and inflationary pressures, manufacturers remained confident that the recent improvement in production and new orders could continue. Firms cited strong order pipelines and expectations for market, product and commercial expansion, while some also anticipated greater stability in the business environment and lower energy prices.
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