U.S. manufacturing activity remained in growth mode for a 10th straight month in October, with most key demand indicators remaining positive. The Monday update supported mostly positive demand commentary provided by public less-than-truckload carriers last week.
Manufacturing supply executives surveyed during the month returned a 55.5 reading for the Institute for Supply Management’s Manufacturing PMI. The report came in one percentage point ahead of analysts’ expectations and the September result. (A reading above 50 for the index signals expansion, while one below 50 indicates contraction.)
A sustained level above 47.5 signals that the overall economy is growing. The October reading was consistent with annualized real GDP growth of 2.7%, which was up from a 2.4% level in September, the report said.
The new orders index—an indicator of future activity—also expanded for a 10th straight month, logging a 55.5 reading, 20 basis points higher than September. Four of the six largest manufacturing industries tracked—machinery; computer and electronics; transportation equipment; and chemical products—reported increases.
Demand sentiment around news orders improved to a 1.8-to-1 positive-to-negative ratio in the month compared to 1.7-to-1 in September.
The backlog of orders (54.6) dipped 1.8 points, but production (59) expanded to the highest level in five years, up 2.3 points sequentially.
Customers’ inventories (41.6) remained “too low,” with no sequential change in the reading. “A ‘too low’ status for the Customers’ Inventories Index is usually considered positive for future production,” the report said.
Manufacturing employment (52.4) remained in growth territory for a fourth straight month.
The supplier deliveries index (59.1), which measures delivery times to manufacturing facilities, has signaled slowing delivery times and supply chain constraints for 11 consecutive months. The dataset was 10 bps higher sequentially. (This ISM subindex is the only one that is inverted.)
Cost inflation remains a primary concern. The prices index (75.2) remained elevated, but 2.7 points below September.
Overall sentiment from respondents was classified as 34% positive and 66% negative, 800 bps worse than two months ago.
“Among negative comments, pricing volatility was mentioned in 62 percent, longer lead times 41 percent, tariffs 25 percent and the Iran war 21 percent; most comments mentioned multiple factors,” the report said.
Institute for Supply Management data typically leads changes in LTL shipments by approximately three months. Public LTL carrier tonnage flipped positive in March on a cumulative, year-over-year comparison. Carriers reported modestly improving demand trends last week in conjunction with third-quarter reports.
XPO (NYSE: XPO) said half of its customers expect stronger demand in the first half of 2027 than in the second half of 2026.
Old Dominion Freight Line (NASDAQ: ODFL) said its customers are seeking multiyear contracts as truck capacity tightens. It also noted that 3PLs are seeking longer-term capacity commitments.
Less-than-truckload stocks were up over 3% on average in early Monday trading. The S&P 500 was up 0.6%.
Why it matters? The ISM data provides key macroeconomic indicators that directly impact logistics, procurement and capacity planning. Changes in manufacturing activity serve as a leading indicator for LTL demand.
