September PMI Numbers & Their Impact on the Industrial Economy

The latest PMI numbers from the Institute of Supply Chain Management show US manufacturing activity expanding for the ninth consecutive month. However, supply chain leaders are still grappling with significant pricing pressures, rising transportation costs, and commodity inflation. This detailed report breaks down the September PMI, new orders, inventory levels, and production, revealing the underlying sentiments of trepidation amidst growth. Discover what these industrial economy indicators mean for the freight and LTL markets.

The Institute for Supply Management’s September PMI came in at 54.5, keeping U.S. manufacturing in expansion territory for a ninth consecutive month, though the reading landed 10 basis points below August and 40 basis points short of consensus expectations. The figure is consistent with approximately 2.4% GDP growth and signals a broadly healthy industrial economy heading into the fourth quarter.

For freight markets, the more consequential data point may be the New Orders Index, which also expanded for the ninth straight month, rising 1.6% from August to 55.4. Five of the six largest tracked manufacturing industries reported new-order growth in September: computer and electronics, chemical products, transportation equipment, food and beverage, and machinery.

Despite the headline expansion, surveyed supply chain executives flagged mounting headwinds. Pricing pressures — driven by elevated diesel costs, tariff-related input inflation, and slowing supplier delivery times — tempered confidence. Demand sentiment within the new-orders subindex fell to a positive-to-negative ratio of 1.7-to-1 in September, down from 2.5-to-1 in July. The ISM Supplier Delivery Index has now signaled supply chain constraints for 10 consecutive months.

“The headwinds of rising interest rates and continued goods cost inflation could detract from some companies choosing to carry elevated stock levels,” said Julie Van de Kamp.

The price index surged 6.8 points to 77.9, with 58.6% of respondents reporting higher prices and raw material costs rising for the 24th straight month. Inventory levels remained lean at 41.6 — a reading typically viewed as a positive signal for future production, though the cost environment could limit how aggressively manufacturers choose to restock.

The ISM data carries particular weight for the less-than-truckload sector. The industrial economy accounts for roughly two-thirds of LTL revenue, and ISM readings tend to lead inflections in LTL data by about three months, Van de Kamp noted. Several publicly traded LTL carriers have already reported year-over-year tonnage growth that accelerated in the third quarter beyond second-quarter levels, with Old Dominion among those citing revenue gains even excluding fuel surcharges.

LTL rates have climbed steadily through 2024, with the monthly cost per hundredweight running nearly 8% higher this September than a year earlier, according to FreightWaves SONAR data. Some carriers have also moved general rate increases forward. “All of this indicates really positive growth for LTL,” Van de Kamp said, adding that full third-quarter earnings reports are expected to begin dropping later in October.

• September PMI held at 54.5 for a ninth straight month of expansion, consistent with ~2.4% GDP growth but slightly below August and consensus forecasts.
• The New Orders Index rose 1.6% from August to 55.4, though positive demand sentiment fell to a 1.7-to-1 ratio from 2.5-to-1 in July.
• LTL rates are nearly 8% higher year-over-year in September, supported by strong industrial demand that typically leads LTL inflections by about three months.

This Summary is generated thanks to a transcription of the interview, for the full interview please enjoy the video above.