US Manufacturing Sends Mixed Signals in October

Two factory surveys point in different directions as U.S. manufacturing straddles growth at home and weakness abroad.

A worker prepares to lift a steel beam with a crane at Central Steel Supply Company in Marlborough, Mass. Joseph Prezioso/AFP

U.S. factory data for October offered a split picture of the economy’s industrial health, with one major survey showing continued growth and another indicating ongoing contraction, pointing to a manufacturing landscape pulled between solid domestic demand and tariff-related export weakness.

S&P Global’s headline manufacturing gauge, released on Nov. 3, rose to 52.5 in October from 52 in September, signaling a third straight month of expansion. The analytics company said U.S. factory production and new orders strengthened, with domestic demand the strongest in 20 months. But exports fell sharply for a fourth month as tariffs continued to weigh on global trade and drive up input costs.

“U.S. manufacturers reported a solid start to the fourth quarter with production rising at an increased rate in response to an encouragingly robust jump in new orders,“ Chris Williamson, chief business economist at S&P Global Market Intelligence, said in a statement. ”However, lift the hood and the picture is not so healthy.”

Williamson said that an unprecedented rise in unsold stock—mostly due to weaker export sales—could trigger a production downshift in the coming months unless demand revives.

Overall, S&P reported “solid improvement” in operations at U.S. factories, with output and new orders rising at faster rates month-over-month. Hiring activity continued to expand for the third straight month, though at a “modest” pace.

The Institute for Supply Management (ISM) painted a more cautious picture. Its key manufacturing index fell to 48.7 from 49.1, marking an eighth consecutive month of contraction. Subindexes for production, employment, and new orders all weakened, while supplier deliveries slowed further, indicating longer lead times. The prices index remained elevated—though to a lesser degree than in September—reflecting ongoing but somewhat softer cost pressures.

“Looking at the manufacturing economy, 58 percent of the sector’s gross domestic product (GDP) contracted in October, down from 67 percent in September,” Susan Spence, chair of the ISM’s manufacturing business survey committee, said in a statement.

However, while a smaller share of America’s overall factory output was in recession in October, the percentage that was in “strong contraction” jumped by 13 percent from September.

Tariffs at the Center of the Divide

Both surveys identified tariffs as a defining factor shaping factory performance. Exporters continued to lose ground abroad while domestic producers benefited from a more insulated U.S. market.

S&P Global respondents reported falling sales to Canada, China, Europe, and Mexico, while ISM’s new export orders index (44.5) stayed deep in contraction. Companies also pointed to longer shipping delays and higher input costs tied to tariff policy.

Still, some manufacturers said they expect some positive tariff-related outcomes.

“Challenges in predicting future trade policy also served to limit confidence in the outlook, although some manufacturers expect to benefit in time from the reshoring of industrial output to the United States,” the S&P Global report states.

Last month, for example, Whirlpool CEO Marc Bitzer said that tariffs have created “a level playing field” for U.S. manufacturers, enabling a $300 million investment in the company’s Ohio laundry appliance plants that will add up to 600 jobs.

President Donald Trump has made tariffs a central pillar of his domestic agenda, saying they both protect key industries and generate revenue.

The Federal Reserve’s latest Beige Book echoed the split tone of the ISM and S&P Global factory data, describing manufacturing activity as “varied” by region and marked by tariff pressures and waning demand. While a few regions reported slight gains, most cited flat or weakening output, higher input costs, and cautious sentiment among factory executives.