The manufacturing sector is having a good year

After a tough stretch, manufacturing is on the upswing
ISM Manufacturing Survey, diffusion index (>50 = expansion)Source: Bloomberg, Institute for Supply Management, as of October 31, 2026.

The industrial economy is showing signs of life. The chart shows the widely followed ISM Manufacturing Survey, which polls purchasing and supply executives across 18 manufacturing industries. The index tracks production, new orders, delivery times, employment, and inventories. After a prolonged period of stagnation, it moved into expansion territory in 2026.

Other data points support this improvement. The government’s industrial production index has risen at a 4.4% annualized rate over the past six months. After declines in each of the past three years, manufacturing employment has increased by about 60,000 jobs so far in 2026.

Not surprisingly, a significant portion of the acceleration in industrial activity can be traced to the AI investment boom. Investors will need to monitor whether the midterm election results lead to policies that slow data center construction and other AI-related production.

What we’re watching this week

Tuesday: The CPI for October will be released. Economists expect more subdued increases in both the headline and core rates after larger rises in September.

Friday: The Producer Price Index (PPI) for September will be reported, providing a measure of inflation at the wholesale level.

Throughout the week: Third-quarter earnings season continues, with several large energy and utility companies reporting.