U.S. Supply Chain Costs Rise as Factory Orders and Wholesale Sales Expand

A 77.9 reading on the ISM manufacturing Prices Index is the figure that defines the supply chain week of October 12, 2026. It rose 6.8 points from August, while new orders and backlogs also improved. The message for purchasing teams is mixed: demand is rebuilding, but the cost of replenishing goods is moving higher faster than inventories.

The Institute for Supply Management's September manufacturing survey, released October 1, put the headline PMI at 54.5, down just 0.1 point from August and marking a ninth consecutive month of factory-sector expansion. New orders increased to 55.3 from 53.7, and order backlogs reached 56.4 from 51.8. Those gains are real demand signals, although they do not erase the squeeze in input costs.

Prices at 77.9 is a diffusion index, not a percentage increase in supplier invoices. It means price increases were widespread among survey respondents. The index had already been elevated at 71.1 in August, and September's jump extended its increasing streak to 24 months. Procurement managers should read that as reduced room to count on supplier discounts, not as a direct forecast for consumer inflation.

Related reading: ISM Data Shows Costs Rising Even as Inventory Growth Slows.

Delivery conditions remain a constraint. ISM's Supplier Deliveries Index registered 59.0, down slightly from 59.3 in August. Because that index is inverted, a reading above 50 indicates slower deliveries. The decline by 0.3 point suggests a modest easing in the pace of delays, but the index still signals slower performance for a tenth consecutive month. Companies need to separate improving order books from actual physical throughput.

Inventories offer the counterweight. ISM's manufacturing inventory index slipped to 48.6 from 50.6, meaning factory stocks moved back into contraction territory. Customers' inventories stood at 41.6, down from 42.8, which ISM characterizes as too low. Lean stocks can support further orders if demand holds, but they also leave buyers more exposed to a delivery slip or a fresh round of price increases.

Related reading: China’s Golden Week Tests the $10,428 Shanghai to New York Rate.

The latest Census wholesale report, released October 8 for August, adds a dollar-value view. Merchant wholesalers sold $817.5 billion of goods, up 1.8% from revised July and 15.6% from August 2025. Inventories were $964.2 billion, up 0.5% month over month and 6.4% year over year. The inventory-to-sales ratio fell to 1.18 from 1.28 a year earlier. That is fewer months of stock relative to sales, not a physical volume measure; the Census figures are not adjusted for price changes.

Read together, sales growth outpaced stock growth, while factory buyers reported low customer inventories and rising prices. The pattern is consistent with restocking demand, but nominal sales growth may include higher prices as well as more units. The inventory ratio therefore argues against calling this an unambiguous volume boom. It does suggest that a disruption would reach buyers with less cushion than the year-ago benchmark.

A one-year comparison puts the current factory survey in perspective. In September 2025, ISM manufacturing PMI was 49.1, with new orders at 48.9 and inventories at 47.7. That print described contraction in manufacturing. September 2026 instead brought a 54.5 headline and 55.3 new orders, a marked shift in the direction of activity. The change in the Prices Index is just as striking: 61.9 in September 2025 versus 77.9 now, indicating much broader reports of rising input costs.

The service side also matters because transport, warehousing, and wholesale activity carry goods through the chain. ISM's September Services PMI, released October 5, was 54.9, down from 55.4 in August. New orders stayed firm at 59.8, but the services Prices Index rose to 74.0 from 72.6, its highest reading since July 2022. Services inflation can feed logistics contracts and labor-intensive fulfillment costs even when a company has secured a product price.

Ocean freight gives a more direct cost marker. Drewry's October 8 World Container Index fell 2% week over week to $4,351 per 40-foot container as Golden Week demand eased. Shanghai to Los Angeles fell 3% to $7,624, while Shanghai to New York declined 2% to $10,220. The prior October 1 reading was $4,434 globally, with Shanghai to Los Angeles at $7,835. That retreat offers some relief on spot freight, but the U.S. West Coast lane remains expensive and the index captures only spot bookings, not contract rates or inland delivery.

What to watch next

The next scheduled ISM releases cover October activity: Manufacturing PMI on November 2 and Services PMI on November 4, both at 10:00 a.m. Eastern, according to ISM's calendar and September report pages. Before then, buyers should watch whether new orders stay above 50 while customer inventories remain low, and whether Prices holds near September's high. In freight, Drewry's next weekly assessment will show whether post-holiday capacity and booking demand continue to pull spot rates down.

The implication for margins is asymmetric. Shippers may gain a little room from easing spot rates, but broad input-price pressure and a low inventory buffer leave less protection if demand persists or transit times lengthen. Stronger sales do not guarantee stronger unit volumes or profit. The next test is whether the November surveys show costs cooling while orders remain firm, or whether replenishment becomes a more expensive race for capacity.

This content is for informational purposes only and does not constitute financial advice. Past performance is not indicative of future results. Consult a qualified financial advisor before making investment decisions.