US factories paid more for metal in September

American factories were about as busy in September as they were in August. They were not paying the same for the metal. The Institute for Supply Management’s manufacturing index came out on Thursday at 54.5, a tenth of a point under August. Anything over 50 means the sector says it is growing. The number that moved was prices. That index rose from 71.1 to 77.9.

Susan Spence, who chairs the survey, gave three reasons, and none of them is a mystery to anyone buying a fabrication. Steel and aluminum are up, and that cost runs through the whole chain. Tariffs are on a lot of imported goods. Petroleum-based materials are up because of the conflict in the Middle East. The index does not tell you the invoice. It tells you that more purchasing managers reported an increase than a fall, by a wider margin than last month.

54.5

The headline index. August was 54.6. Ninth month of growth

77.9

Prices. Up 6.8 points in a month

55.3

New orders. Up from 53.7

41.6

Customer stocks. ISM reads that as too low

Orders in, metal tight

The rest of the survey is not a slowdown. New orders rose to 55.3, the ninth month in a row of growth. Backlogs jumped from 51.8 to 56.4, so work is arriving faster than it is leaving the shop. Production cooled a little, from 58.3 to 56.7, and is still growing. Employment moved up to 52.7. Factories’ own stocks slipped back under 50, to 48.6. Their customers’ stocks are at 41.6, which ISM treats as too low. Supplier deliveries stayed slow, at 59. A high delivery number means it is taking longer to get the part, not that the lorries are quicker.

Exports eased to 50.9, just on the right side of the line, from 53.2. Imports eased to 51.0. The demand in the survey is domestic more than it is foreign, and the comments say why some of the foreign supply has become awkward.

What the buyers wrote

The useful part of this release is not the average. It is what people in named industries actually wrote.

A machinery firm said orders had doubled again, and so had delivery times, in semiconductors, electronics and government work, while other sectors were flat or down. The backlog had nearly doubled. Tariffs on Canada, the firm said, had hit cross-border costs and left the supply team scrambling on chains that took years to build. Another machinery firm said domestic steel capacity is stretched by demand for AI and data centres, and that the steel price is rising every month into both the raw material and the finished part. Higher interest rates, the same note said, are slowing new construction.

A fabricated-metals firm called the worker shortage the thing that is capping output, and steel the second problem. The market is getting worse, they wrote, and more delays are coming as they run out of the sizes they need. An electrical-equipment firm said metals are still difficult, and that tariffs being on and then off make it worse. New tariffs against Canada, they said, have pushed up the cost of capital equipment and of assemblies.

A transport-equipment firm was blunter. The trade fight with Canada is putting prices up, and customers are pushing capital spending out because they will not commit until costs and demand are less of a guess. A computer and electronics firm said the tariff schedule is the challenge, along with finding sources that are not in China, local objections to data centres, and shortages of materials.

Who is actually up

Twelve industries reported growth. Among the six largest, computers and electronics, food and drink, transport equipment, machinery and chemicals were up. Petroleum and coal products were not in that expanding group. Only two industries reported a contraction: printing, and textile mills. The growth is broad. It is not even. Only two of the six largest industries reported higher employment, which is why a headline of 52.7 on jobs should not be read as a hiring boom.

This is the ninth month the factory survey has been in growth, and the twenty-third month ISM has read the wider economy as expanding. The headline is the part that did not move.

What the number will not do

A headline that sits still can be filed as a quiet month. It was not a quiet month for a part with steel or aluminum in it, or a Canadian content, or a delivery that depends on a semiconductor. The survey will not give a dollar a tonne. It says the people who buy the metal already recorded an increase in September, that their own shelves got thinner, and that their customers’ shelves are thin enough that a reorder is the usual next step. A reorder is not the same thing as a reorder at last month’s price.

The other split is inside the order book. Machinery and electronics firms are describing demand that has doubled, much of it tied to data centres and government work, while a transport firm says its customers have stopped signing for equipment until the duty is less of a guess. Both can be true in the same month. One is a shortage. The other is a wait. A supplier quoting both kinds of customer off the same 54.5 will misread at least one of them.

Nine months of growth is the background. The foreground, in the words ISM printed, is the metal, the tariff schedule, and the Canada border. Those are the lines that moved a buyer’s cost in September. The index did not.