ISM Manufacturing PMI
Actual: 54.5%
Previous: 54.6%
Ninth consecutive month of expansion, nearly flat
New Orders
Actual: 55.3%
Previous: 53.7%
Sharp acceleration, +1.6 point
Prices, the number dominating this release
Actual: 77.9%
Previous: 71.1%
A 6.8-point jump, close to the March level (78.3%), the start of the Iran war
Employment
Actual: 52.7%
Previous: 51.2%
Notable acceleration, +1.5 point
Backlog of Orders
Actual: 56.4%
Previous: 51.8%
Sharp rise, +4.6 points
The real signal, prices return to their March peak
Spence states it explicitly, the 77.9% level is close to the 78.3% peak recorded in March, right at the conflict's start
58.6% of respondents report price increases (versus 46.2% in August), a 12.4-point jump in a single month
Consistent with oil rising again after Trump's rejection of Iran's proposal already documented in this series, this release confirms the concrete spread of the shock into manufacturing costs
The Iran factor, now explicitly cited by respondents
30% of negative comments directly cite the Iran war
Price volatility: 46%, tariffs: 34%, lead times: 21%
Third consecutive month this geopolitical factor appears explicitly in manufacturing sector feedback documented in this series
Underlying slowdown signal, despite headline stability
Of the five PMI components, only New Orders and Employment accelerated, the other three (Production, Supplier Deliveries, Inventories) slowed
Inventories back in contraction (48.6% versus 50.6%), first decline in a while
Respondent sentiment deteriorating, positive-to-negative comment ratio dropping to 1-to-1.6, from 1-to-1.5 in August
Canadian tariffs, a new emerging theme
Several respondents (Machinery, Electrical Equipment, Transportation Equipment) explicitly cite deteriorating trade relations with Canada
One Transportation Equipment respondent describes a "trade war with Canada getting worse every day"
A new signal in this series, previously dominated by generic tariff tensions, this specific Canadian point is worth tracking
Commodities, none down in price
An impressive list of increases, aluminum (34 consecutive months), copper (15 months), steel (11 months)
No commodity reported down in price, a notable fact explicitly highlighted in the release
DRAM and electronic components still in short supply, consistent with the AI theme already documented in this series
Commitment lead times, notably lengthening
Capital expenditures: 176 days on average, +5 days versus August
A caution signal as businesses commit over longer horizons amid uncertainty
Full consistency with this week's already-documented hawkish run
This release completes the sequence of strong ADP, core PCE at 3.0%, GDP revised to 2.2%, stable claims, all already analyzed this week
The jump in prices paid (Prices Index) is the most directly relevant element for the Fed's trajectory, consistent with oil above $100 and the pass-through already documented in PPI weeks earlier
Implications
DXY: bullish bias maintained, this release closes out a one-sidedly hawkish US week, the jump in prices paid directly reinforces the argument of inflation continuing to spread through the real economy
Friday's NFP remains the week's last test, but after this complete sequence (ADP, PCE, GDP, claims, ISM), the market enters that release with already very high expectations
The divergence between a stable headline (54.5%) and surging prices (77.9%) is the most relevant point for the Fed, manufacturing-level stagflation rather than simple overheating
Point of caution
Headline stability masks deterioration across several underlying components (Production, Inventories, respondent sentiment), not to be mistaken for broad-based acceleration
The Canadian tariffs theme is new in this series and worth tracking in upcoming releases to see if it becomes a structural factor alongside the Middle East conflict
The lengthening of capital commitment lead times (176 days) signals growing business caution that could weigh on investment in coming months, even as current activity stays solid