The Institute for Supply Management's prices index for manufacturing rose 6.8 points to 77.9 in September from 71.1 in August, according to its monthly report. ISM said the reading is close to the 78.3 recorded in March, at the beginning of the Iran war. Raw materials prices have increased for 24 straight months.
Higher prices were reported by 58.6% of respondents, up from 46.2% in August. ISM's list of commodities that fell in price was empty. The index is the highest since May, when it stood at 82.1 before falling to 73.0 in June.
Susan Spence, who chairs ISM’s manufacturing survey committee, said the index is being driven by “(1) increases in steel and aluminum prices that impact the entire value chain, (2) tariffs applied to many imported goods and (3) increases in petroleum-based products as a result of the Middle East conflict.”
Supplier deliveries were slower for a 10th straight month, but the index eased to 59.0 from 59.3 in August. Lead times for production materials held at 84 days. They rose to 176 days from 171 for capital expenditures and to 49 days from 48 for MRO supplies.
Electronic components were in short supply for the 19th straight month and electrical components for the 15th. Steel, copper and printed circuit boards were each on the list for a third month. Memory and DRAM were also listed.
A fabricated metal products respondent named steel availability as its second challenge after a shortage of workers: “the market is getting worse, and more production delays are expected as we gap out of needed material.” A machinery respondent said demand from AI and data centers has stretched domestic steel capacity. Three respondents, in machinery, electrical equipment and transportation equipment, said Canada tariffs or the Canada trade war are affecting their costs or prices. A chemical products respondent said lead times have largely normalized.
The headline PMI was 54.5, down from 54.6 in August. Inventories fell to 48.6 from 50.6 and returned to contraction.
S&P Global’s US manufacturing PMI rose to 55.9 from 53.9, the strongest since May 2022. S&P said vendor lead times lengthened to the greatest degree since August 2022, with steel and electronics-related items hard to source and customs delays at the Canadian border.
