ISM prices paid jump to 77.9 as jobs stay soft
September's ISM manufacturing index held at 54.5, but the prices-paid gauge surged to 77.9 from 71.1. That sticky factory inflation sits beside Friday's soft +29,000 jobs print. The mix keeps a stagflation watch alive for the Fed and for shoppers.
Factory activity expanded again in September, but the cost side of the ISM report is the weekend headline. The Institute for Supply Management's Manufacturing PMI registered 54.5, barely below August's 54.6 and a ninth straight month in expansion. The Prices Index, however, jumped 6.8 points to 77.9 — near its March reading at the start of the Iran war — as 58.6% of survey respondents reported paying higher prices for raw materials.
Chair Susan Spence said steel, aluminum, tariffs, and petroleum-linked products from the Middle East conflict are still driving the prices gauge. New orders rose to 55.3 and employment to 52.7, while inventories slipped back into contraction at 48.6. Supplier deliveries remained slow at 59.0. Panelists' comments leaned negative, citing pricing volatility, tariffs, the Iran war, and longer lead times.
Set beside Friday's payrolls print of just +29,000 jobs and 4.2% unemployment, the ISM prices spike is why traders talk about stagflation risk even as October rate-hike odds fell. Soft hiring argues against an immediate tightening move; factory price pressure argues the inflation fight is unfinished. Markets closed higher Friday anyway, betting the Fed can wait — not that prices have rolled over.
Backstory: ISM prices have now increased for 24 straight months. Commodities listed up in price include diesel fuel, steel products, semiconductors, and freight — the same inputs that feed consumer goods and construction budgets.
Where to watch: the next ISM release Nov. 2 and any PPI/CPI prints that confirm or fade the factory price surge.
What we know:
ISM manufacturing PMI was 54.5 in September with prices paid at 77.9. Friday's jobs report stayed soft at +29,000.
What we don't:
Whether factory price pressure shows up fully in consumer inflation before the Fed's next meetings.
Where outlets agree ISM and Friday jobs wraps agree factory prices stayed hot while hiring cooled — the core soft-jobs, sticky-prices tension.
Where they differ Markets cut October hike odds on soft payrolls; some strategists still see later hikes if ISM-style price pressure feeds consumer inflation.