With all the noise this week about inflation, interest rates and jittery tech stocks, it would be easy to miss a piece of good news: American factories are busy.
The chart above shows the ISM manufacturing index, a monthly survey of the people who buy supplies for factories across the country. Think of it as a report card for the factory floor. Above 50 means activity is growing. Below 50 means it’s shrinking.
For most of the past three years, this index sat below 50. From late 2022 through the end of last year, it was in shrinking territory in 35 out of 38 months. While the rest of the economy kept growing, manufacturing never really got going.
This year it flipped. The index has been above 50 for nine straight months. It reached 55.6 in July, the highest reading since the spring of 2022, and came in at 54.5 in September. That’s a stronger stretch than anything we saw in 2023, 2024 or 2025.
Why the turnaround? Part of it is the AI buildout, which needs real equipment made in real factories. Part of it is that factory activity has picked up around the world, not just here. The same survey also shows the prices manufacturers pay climbing along with fuel and raw material costs, which is one reason inflation is proving stubborn.
The bottom line? Interest rates are high and the public mood is low, but the factory floor is the busiest it has been in four years.
An economy with busy factories can absorb a lot of bad news.
This is intended for informational purposes only and should not be used as the primary basis for an investment decision. Consult an advisor for your personal situation.
Indices mentioned are unmanaged, do not incur fees, and cannot be invested into directly.
Past performance does not guarantee future results.