The Federal Reserve’s Fifth District manufacturing index fell to -2 in September 2026, its first negative reading in six months, down from 4 in August and defying market expectations for an expansionary reading of 5. Both shipments and new orders slipped into contraction, with the shipments index dropping to -5 and the new orders index to -6. The order backlog deteriorated further, declining to -10 from -7.
In contrast, the employment index improved, rising to 7 from -2 in the prior month. Looking ahead six months, expectations for shipments (33 vs. 26) and new orders (32) remained solidly in expansionary territory. However, sentiment weakened for capital expenditures (-1 vs. 4) and raw material inventories (-1 vs. 3).
Respondents anticipate lower prices paid and prices received over the next 12 months, while employment expectations fell sharply to 8 from 20. At the same time, the index for future local business conditions continued to soften, dropping to 10 from 16.
