ISM Manufacturing PMI – What to Expect – 01.10.25
On Wednesday, 1 October 2025 (15:00 UK), the Institute for Supply Management (ISM) will release the September Manufacturing PMI and components, a market-moving gauge of U.S. factory activity that shapes views on growth momentum, inflation pressures, and interest-rate expectations.
Our base case considers the latest available data releases, including the S&P Global flash PMI, September regional Fed manufacturing surveys (New York, Philadelphia, Richmond, Dallas, Kansas City), August hard data (industrial production, durable goods/core capex), and late-September cost dynamics, most notably energy.
Base case – Our Call vs Street Estimates
| Series | Prev | Cons./Street | Our Call | Surprise skew |
|---|---|---|---|---|
| ISM Manufacturing PMI (Sep) | 48.7 | 49.0 | 49.2 (range 48.5 – 49.8) | Slight above street, still sub-50 |
| ISM Employment | 43.8 | 44 | 44.5 (43 – 46) | In line / marginally firmer |
| ISM New Orders | 51.4 | 51.5 | 50.5 (49 – 51.5) | Softer than street (risk dips to 50) |
| ISM Prices Paid | 63.7 | 63.8 | 62.8 (61.5 – 64.0) | Slightly softer vs Aug/consensus |
Why:
1) National PMI signals: “cooling expansion” (S&P) vs still-contracting ISM level
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S&P Global flash US manufacturing PMI eased to 52.0 in Sep (from 53.0), with new orders only marginally higher, manufacturing job losses, record finished-goods inventory build, and supplier delays lengthening (second-largest in ~3 yrs). That mix typically lifts ISM’s supplier-deliveries subindex but caps the headline given weak employment and softer orders—i.e., points to upper-40s to ~50 on ISM, not a clean re-entry above 50.
2) Regional Fed surveys: mixed, but the orders/employment breadth leans weak
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NY Fed (Empire): headline -8.7; new orders -19.6, prices paid down to 46.1; employment ~flat. Clear deterioration.
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Philadelphia Fed: headline +23.2; new orders +12.4; prices paid down sharply to 46.8; employment modestly positive (5.6). Firmer, but it’s the outlier. Federal Reserve Bank of Philadelphia
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Richmond: composite -17; new orders -15; employment -15; vendor lead time ~unchanged; prices-paid growth little changed. Weak.
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Dallas (Texas): new orders -2.6, employment -3.4, prices paid 43.4 (elevated); general business activity -8.7. Softening.
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Kansas City: composite +4 with production & employment up, and price growth eased slightly. Small positive.
Read-across: Averaging those regionals’ headline balances is roughly flat/slightly negative, consistent with ISM 49. The new-orders average across (NY, Philly, Richmond, Dallas) is modestly negative, consistent with ISM New Orders near 50 (vs 51.5 street).
Employment breadth remains soft (NY 0, Richmond/Dallas negative, KC positive, Philly small positive) – ISM Employment low-mid 40s. Prices indices broadly moderating (Empire & Philly down, KC “eased slightly,” Dallas still elevated), so ISM Prices Paid likely dips a touch vs Aug.
3) Hard data & macro context (Aug)
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Manufacturing output rose 0.2% m/m in Aug (autos +2.6%); that supports ISM production stability but doesn’t guarantee a headline >50 with orders/employment soft.
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Durables: headline orders +2.9% m/m; core capex orders +0.6% m/m but core shipments -0.3% – investment demand not collapsing, yet near-term shipments softness squares with mixed regionals & weaker orders momentum.
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Costs/prices backdrop: S&P flash shows tariffs driving elevated input costs but selling-price inflation cooling (margin squeeze). Regionals echo prices paid moderating. Energy eased into today as well, which trims near-term input-price pressure. Net: Prices Paid high but drifting lower from 63 – 64.
Component-by-component expectations:
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Headline PMI (call 49.2): Supplier-delivery lengthening (S&P) lends a mechanical push up, but orders 50 and employment in the mid-40s cap the recovery. Bias is slightly above 49.0 consensus but still sub-50.
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Employment (call 44.5): S&P flags manufacturing job losses; regionals skew weak (Richmond, Dallas <0), with Philadelphia Fed / KC offsetting modestly. That maps to low-mid 40s, in line to a hair above the informal 44 street view.
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New Orders (call 50.5): Flash PMI says only marginal growth; regionals’ breadth tilts negative ex-Philly. Expect near-neutral/softer vs 51.5 consensus. Watch for export drag (tariffs) to be cited.
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Prices Paid (our call 62.8): Still elevated (tariffs/supply frictions) but moderating, Empire/Philadelphia down, KC eased, Dallas still high, plus a late-Sept dip in crude. Sideways-to-slightly-lower vs Aug/consensus.
What Could Swing It
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Chicago PMI (Tue): A big upside/downside surprise often nudges ISM expectations a touch the day before; August Chicago was 41.5 (deep contraction). A weak Chicago again would argue for the low end of my headline range; a firm bounce would favor the high end. Our base case for Chicago PMI is 41.2, as outlined in yesterdays article.
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Auto channel: Aug IP was supported by autos; if ISM respondents emphasize autos’ stabilization, that helps production but not necessarily orders.
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Tariff/supply commentary: S&P flash flagged longer delivery times and record inventories, if ISM echoes that strongly, it can support the headline (supplier deliveries) even as demand metrics soften.
Market Take
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Positive surprise risk: Headline >50 with new orders >52 would read as a manufacturing re-acceleration—USD & UST 2y up, risk-on (watch USD/JPY topside given your focus).
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Negative surprise risk: Headline <49 with new orders <50 and prices paid >63 = soft growth & sticky costs (stagflationary feel), USD mixed, rates curve bull-steepens, equities wobble.
Conclusion
We expect a slightly firmer headline yet still sub-50 (ISM 49.2 vs 49.0 cons), Employment stabilizing but weak (44.5), New Orders near-neutral and a touch soft (50.5 vs 51.5), and Prices Paid elevated but easing (62.8 vs 63.8).
The risk skew tilts down via orders breadth and labor softness, with upside tethered to supplier-deliveries mechanics and any last-minute boost from Tuesday’s Chicago PMI, in which we are looking for a modest stabilization near 41.2 compared to street estimates of 40/41.
For positioning, a clean >50 with New Orders >52 argues for USD strength and pushes front-end yields higher (watch USD/JPY topside), while a <49 print with Orders <50 and Prices >63 implies growth soft/sticky costs, favoring bull-steepening and a more mixed USD.
Into the release, focus on Chicago PMI, energy/freight tone, and tariff headlines, and pre-define reaction bands (>50 / 49–50 / <49) to keep execution disciplined and aligned with your high-conviction, volatility-aware playbook.
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