U.S. Manufacturing PMI Reaches 56.0, Highest in Four Years, as Survey Signals 5% Q4 Growth
Key Takeaways
- •The US Manufacturing PMI rose to 56.0 in October 2026, exceeding the forecast of 55.5 and reaching its highest level since May 2022.
- •Factory hiring expanded at its fastest pace since March 2012, lifting the headline index even as the output index slowed to 55.8 from 56.2.
- •S&P Global's survey implied annualized fourth-quarter growth of up to 5.0%, compared with a survey-based estimate of roughly 4% for the third quarter.
- •Composite new orders climbed to 58.2, their strongest since March 2022, and goods export orders rose for the first time since June 2025.
- •The composite selling prices index reached 59.8, its highest since August 2022, while input costs stayed elevated at 64.9 amid supply disruptions and higher oil prices.
The U.S. Manufacturing Purchasing Managers' Index (PMI), a survey gauge in which readings above 50 signal month-on-month expansion, rose to 56.0 in October 2026, exceeding economists' forecast of 55.5 and reaching its highest level since May 2022. The preliminary survey from S&P Global, released October 23, showed manufacturers expanding despite rising costs, supply constraints and longer supplier delivery times.
The October reading increased from September's 55.9 and extended the manufacturing sector's recovery from its 2023 contraction. Factory hiring recorded its fastest growth since March 2012, helping drive the headline result. However, the output index eased to 55.8 from 56.2, indicating that overall manufacturing conditions improved even as the pace of production growth moderated.
BREAKING: The S&P Global US Manufacturing PMI index rose +0.1 point in October, to 56.0, its highest level since May 2022. This exceeded expectations of a -0.4 point decline. The improvement was particularly driven by job growth, which rose to its strongest level since March… pic.twitter.com/wwlCvHXPJy — The Kobeissi Letter (@KobeissiLetter) October 24, 2026
Broader private-sector activity remained strong, although services lost momentum. The services PMI declined from 58.8 to 57.9, while the composite PMI fell from 58.4 to 57.6. Despite the decline, the composite index remained at its second-highest level since March 2022.
S&P Global's survey also produced a survey-based estimate indicating that annualized fourth-quarter economic growth could reach 5.0%, supported by stronger employment and new orders. The estimate reflects survey conditions and is not an official GDP figure. The survey-implied pace compares with an estimated 4% growth rate for the third quarter based on the PMI. Separate economists' estimates placed third-quarter growth at about 3%, highlighting the difference between survey indicators and economic forecasts. Final October PMI estimates, which incorporate complete survey responses, and official GDP releases will serve as benchmarks for how closely survey conditions align with measured output.
Factory hiring accelerates amid supply bottlenecks
The manufacturing PMI reached a 53-month high, reversing much of the weakness seen when the index fell to around 46.2, well below the 50 threshold that separates contraction from expansion. The employment component posted the clearest improvement, with hiring expanding at its fastest recorded pace since March 2012. Manufacturers added workers to meet demand and address growing backlogs.
Production continued to expand, but at a slightly slower rate. The output index declined from 56.2 in September to 55.8 in October. Because the manufacturing PMI measures overall business conditions rather than production alone — combining sub-indices on output, new orders, employment, supplier delivery times and inventories — stronger employment and orders were sufficient to lift the headline index despite the moderation in output growth.
Manufacturers also reported longer supplier delivery times as raw-material shortages, shipping disruptions and capacity constraints affected operations. The delays made it more difficult for factories to clear outstanding orders, meaning that stronger demand was accompanied by continued operational pressure rather than an uninterrupted recovery. In the index's construction, lengthening supplier delivery times also feed positively into the headline calculation, so supply strains contribute to the reading even as they burden factory operations.
New orders strengthen as price pressures increase
Composite new orders rose to 58.2 from 58.1, marking their strongest level since March 2022. Export sales recorded their fastest growth since May 2022, while goods export orders increased for the first time since June 2025. These developments supported the survey's indication of near-5% annualized fourth-quarter growth.
Inflationary pressures also intensified. The composite selling prices index climbed from 58.4 to 59.8, its highest level since August 2022. Input costs remained elevated at 64.9, reflecting persistent price pressures across the economy.
The survey linked the cost pressures to supply disruptions and higher oil prices. Rising energy, transportation and material expenses continued to weigh on businesses even as factory activity strengthened, complicating efforts to bring inflation toward the Federal Reserve's 2% target.
S&P Global's preliminary survey is available here.
