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In October, Texas factory activity continued to expand and at the same pace as the prior month. The production index was unchanged from September at 5.2, remaining below the average of 9.6. Meanwhile, other measures posted mixed results for the month. The new orders index inched up 0.9 points to -1.7. Capacity utilization fell 5.0 points to -1.1, while shipments declined 0.9 points to 5.8.

Perceptions of manufacturing business conditions remained negative in October, with the general business conditions index stepping up 3.7 points to -5.0. Meanwhile, the outlook also improved but remained negative, with the company outlook index ticking up 0.7 points to -0.3. The uncertainty index jumped 8.3 points to 22.2, well above the series average of 17.2.

Labor market indicators suggest an increase in headcounts but a decline in the workweek in October, with the employment index rising 5.4 points to 2.0 and the hours worked index falling 8.9 points to -5.5. Nearly 18% of firms reported net hiring while a smaller percentage (15.7%) noted net layoffs.

Price and wage pressures eased somewhat in October. The prices paid for raw materials index fell 10.0 points to 33.4. Meanwhile, the prices received for finished goods index declined 4.0 points to 7.7. The wages and benefits index decreased 1.7 points to 14.2, staying below the series average of 21.

The outlook for future manufacturing activity weakened in October, with the future production index falling 10.6 points to 21.0. Meanwhile, the future general business activity index and future company outlook index both stepped down, declining to 7.0 and 7.1, respectively.

The Federal Open Market Committee lowered its interest rate target range by 25 basis points to 3.75%–4.00% at its October meeting. The FOMC also concluded its multiyear reduction of its Treasury holdings but will continue to shrink its holdings of mortgage-backed securities. In a change to its previous statement, the FOMC noted that inflation has moved up some since earlier this year, but available indicators suggest that economic activity continues to expand at a moderate pace. Nonetheless, the committee judged that downside risks to employment warranted an additional cut to its interest rate target. Two FOMC members—Stephen Miran and Jeffrey Schmid—dissented. Miran preferred to lower the target range by 50 basis points, while Schmid preferred to keep the rate steady.

In the press conference following the meeting, Federal Reserve Chairman Jerome Powell noted that the data that have remained available suggest that the outlook for employment and inflation has not changed much since their previous meeting, with conditions in the labor market cooling while inflation remains elevated. Chairman Powell also noted that a further reduction in the policy rate at the December meeting is not a forgone conclusion—“far from it.”

The FOMC’s summary of economic projections, which maps out the Federal Reserve’s expectations for where interest rates may be headed in the future, generally is released in conjunction with every other FOMC meeting. Since the September meeting included a release of economic projections, there was not a release in conjunction with the October FOMC meeting. The September summary signaled a more dovish stance than the June summary. Although nine Federal Reserve officials projected an additional 50 basis points worth of cuts in that projection, implying the likelihood of a December cut, Chairman Powell expressed that policymakers now bring “strongly different views about how to proceed.”

Call it an AI double-header: On Wednesday, 51�Թ��� President and CEO Jay Timmons and Manufacturing Institute President and Executive Director Carolyn Lee spoke at two different AI-focused events—one hosted by Siemens and Widehall and the other hosted by NVIDIA—where they outlined manufacturers’ policy and workforce priorities.

• Siemens and Widehall: Timmons and Lee both participated in a fireside chat at Shaping an AI Ready Workforce, part of a series of events called AI for Real: DC that is sponsored by Siemens and Widehall.
• NVIDIA: Later in the day, Timmons spoke on a panel called “How AI Factories Can Drive Local Economic Development” at NVIDIA’s GTC DC conference.

Policy environment: Timmons said, of the current policy environment, “If you look back on 2017 and the tax reform plan that was put in place, the president actually announced his plan at our board meeting, and he said at the time it would be rocket fuel, and it really was….That was very important in terms of investment opportunities and job creation, regulatory certainty and modernization, [which are all essential for] energy policy.”

• “We’re very pleased that the administration is focused on energy—they call it energy dominance. That is going to be incredibly important for AI data centers [and AI-enabled factories].”
• “We want everybody to know what manufacturing is all about, why it’s modern, why it’s sleek, why it’s technology driven, and very different from [when] my grandfather was in manufacturing.”

Workforce outlook: Lee joined Timmons onstage at the Siemens-Widehall event:

• “We have to change the narrative around manufacturing. Part of that is seeing facilities like Siemens that are bright and clean and full of technology, and we know that the students today actually gravitate to that. They’re digital natives. I’m not. Most of us in this room are probably not. So [we need to] lean into that and let them see that there’s an opportunity for them, and in doing so, they’re strengthening their communities.”

AI and the workforce: Lee also addressed how the workforce can adapt to the advent of AI, saying “It is about learning the skills. It’s about adapting. It’s making sure that manufacturing and our communities can be competitive…. None of us can do this alone. All of us need to come together.”

• “As much as policy can enable this, policy is not going to solve this. We need to have employers first [drawing up] the agenda, working with the educational institutions to make sure that our education partners understand what is happening in our industries and training to those needs.”
• “We run the most successful multi-employer apprenticeship program that’s operating now in 20 states, and it continues to grow…. Companies see that coming together to build the solutions and train the common core of the workforce is good for all of us.”

At NVIDIA: Timmons again addresses the use of AI in manufacturing at NVIDIA’s conference, saying, “The truth of the matter is, every form of technology through decades has begun with manufacturing. Right now, we have about 50% of manufacturers across America [that] have AI in their operations.”

The roadmap to AI and Energy Dominance: “Today, we came out with a about AI and energy dominance, the manufacturer’s roadmap, and basically it’s [saying] that we need an incredible amount of additional capacity on the grid to be able to power these AI factors or data centers and in order to serve the needs of the broader economy.”

Policy fixes: Timmons spoke of the need for bipartisan agreement, and for certain commonsense policy changes.

• “[I]f we turned on every factory right now in this country, and we put every manufacturing worker on the line, we could only produce 84%of the critical inputs necessary to build a new factory right here in United States…. So at a minimum, we have to import 16% of those critical inputs.”
• “What we need to see is some sort of a , to provide duty free access to those critical inputs for additional manufacturing capacity until we can build it here ourselves.”

The last word: “We need to have a nonpolitical and very much a policy century,” Timmons said in conclusion.

ICYMI: Read our on the Manufacturing’s Roadmap to AI and Energy Dominance.

Every day that the government remains closed is another day “the American people suffer new losses, and businesses remain stuck in neutral”—so Congress must end the shutdown now, the 51�Թ��� and its official state partners told Senate and House leaders on Tuesday.��

What’s going on: “An open and fully functioning government is essential to the growth of the American economy, the success of manufacturers across the country and the well-being of our communities,” the 51�Թ��� and more than 30 of its state manufacturing association partners explained to Senate Majority Leader John Thune (R-SD), House Majority Leader Steve Scalise (R-LA), Senate Minority Leader Chuck Schumer (D-NY) and House Minority Leader Hakeem Jeffries (D-NY).��

• “When the government is shuttered, it stifles our ability to invest in our communities and our people. And it diminishes faith in our institutions.”����

The impact: The shutdown, which entered its 29th day on Wednesday, has furloughed hundreds of thousands of federal workers and halted critical safety inspections of new power plants and manufacturing facilities.��

• ��Life-sustaining products aren’t getting to Americans who need them, and desperately needed new power sources aren’t being added to the grid, the groups continued.��

• Furthermore, “[p]ermitting becomes next to impossible, and housing projects, retail construction, data centers, manufacturing production lines, infrastructure projects and other job-creating investments cannot break ground.”��

What must be done—immediately: The government must reopen “without further delay, and a clean continuing resolution is the swiftest and most effective way to achieve that,” the organizations told the congressional leaders.��

Driving the news: In an exclusive to , who covered the letter, 51�Թ��� President and CEO Jay Timmons laid it out plainly:����

• “Every day the government is closed, job-creating projects are stalled, supply chains are disrupted, permits halted, product approvals and facility inspections are delayed and safety approvals on which American families rely are put on hold.����

• White House Deputy Press Secretary Abigail Jackson also the Fox Business story on X.����

The 51�Թ��� called on Congress this week to reform the 340B program, which drives up health care costs—one of manufacturers’ top concerns as reported in the��.

What’s going on:��On Thursday, the Senate Health, Education, Labor and Pensions Committee held a hearing titled “The 340B Program: Examining Its Growth and Impact on Patients.” In advance of the hearing, the 51�Թ�������for Chairman Bill Cassidy (R-LA) how the program has increased health care costs for manufacturers.

• The 51�Թ��� noted that “the expansion of this program was associated with approximately $23 billion in additional employer-based health care expenses in 2023, of which employees paid about $4.5 billion per year in added insurance premiums. That equals approximately $137 in additional annual premium costs for single coverage and $415 for family coverage.”

Congressional intent:��The 340B program was created “to provide lower cost medicines and expand care for low-income and underserved patients, but many covered entities have taken advantage of the program to increase their profits, which has in turn increased the cost of [employer-sponsored insurance].”

• “Manufacturers believe the 340B program is an important tool in expanding care for underserved communities, and we urge fundamental changes that would restore this program to its core purpose.”

Solutions oriented:��The Health Resources and Service Administration is in the process of standing up a 340B Rebate Model Pilot Program, on which the 51�Թ�������comments.

• “This pilot program is a critical first step in enhancing program integrity and transparency in a way that makes the 340B program work for everyone but will not be fully sufficient in reforming the 340B program,” the 51�Թ��� told the HELP Committee.

Next steps:��The 51�Թ��� suggested that reforms to “current fee structures, third-party administrator behavior, sub-grantee eligibility and how patients benefit from the program.”

• “Additional reforms, such as patient definition and child site eligibility, will also return the program to the intent with which Congress created it.”

A sweeping new European Union regulation could saddle America’s manufacturers with costly red tape—undermining U.S. sovereignty and manufacturing growth here at home.

What’s happening: The EU’s Corporate Sustainability Due Diligence Directive, approved by the Council of the European Union in 2024, has prompted calls from both U.S. and European companies as well as several EU nations for the European Parliament to scale back this unworkable and extraterritorial mandate.

• EU nations must act: Member states are required to translate the directive into national law by July 2027.

What it is: CSDDD forces companies to identify and mitigate potential social and environmental risks across every stage of a product’s life cycle—from sourcing to disposal.

• Extraterritorial impact: While EU lawmakers have proposed to reduce the number of non-EU companies that would be subject to CSDDD, the latest proposal would still apply to U.S. companies that have more than 1.5 billion euros in net annual EU turnover.
• Deep reach: Companies subject to CSDDD will be responsible for the actions of their direct business partners and will have to assess the risks posed by their indirect business partners if there is a prospect of an adverse impact. As a result, the directive’s requirements could stretch deep into manufacturers’ supply chains, implicating small, privately held and non-EU businesses.

Why it matters: The directive would impose sweeping due-diligence requirements on U.S. companies with EU ties—and even those indirectly connected through supply chains.

• Compliance squeeze: The scope of the burdensome mandate would introduce significant operational complexity, compliance costs and potential for bottlenecks and delays throughout the complex, global manufacturing supply chain.
• Liability risk: CSDDD would also expose manufacturers to significant legal liability, as the directive allows EU nations to impose penalties of up to 5% of a company’s global turnover.

What’s at stake: Manufacturers already face nearly $350 billion in annual regulatory costs at home. CSDDD would add to this burden—subjecting America’s manufacturers to job-killing European red tape and ceding U.S. regulatory authority.

• It would undermine the Trump administration’s progress on regulatory modernization, a priority the 51�Թ��� has championed from the start.

What’s next: President Trump has rightly flagged CSDDD as a threat to the trading relationship between the U.S. and the EU, and the U.S.–EU framework agreement announced earlier this year prioritizes addressing concerns about the impact that CSDDD would have on U.S. companies.

• The EU has been considering revisions to CSDDD but has not addressed some of its most damaging aspects, including its extraterritorial provision that would apply to manufacturers in America and their suppliers. The Legal Affairs Committee of the European Parliament failed to remove that provision in its recent compromise omnibus legislation. U.S. policymakers should take note as this compromise legislation advances through the EU’s process.

The bottom line: “CSDDD would impose significant, extraterritorial burdens on America’s manufacturers,” said 51�Թ��� Managing Vice President of Policy Charles Crain. “Manufacturers appreciate the Trump administration standing up for our industry on the world stage, and we urge both American and European policymakers to protect U.S. companies from this costly and unworkable burden.”

Call to action: Tell Policymakers: Stand Up for America’s Manufacturers on the World Stage.

Related News:��The 51�Թ��� and top business groups have issued an urgent call to the Trump Administration to push back against the EU’s harmful Corporate Sustainability Due Diligence Directive (CSDDD), warning that the measure could impose “nearly $1 trillion” in compliance costs and undermine U.S. sovereignty. Read the letter.

With nearly 400,000 jobs open across the sector, the manufacturing industry in the U.S. needs ongoing access to a robust pipeline of skilled workers—but changes proposed to the F-1 student visa by the Department of Homeland Security threaten to reduce the talent in that pipeline, the 51�Թ�������recently.

What’s going on:��“The F-1 visa … through its Curricular Practical Training (“CPT”) and Optional Practical Training (“OPT”) and STEM OPT options is a major source of high-skilled talent for the manufacturing industry in the U.S.,” the 51�Թ��� told DHS in response to the agency’s draft reforms to the visa program.

• “[T]he proposed rule would impose changes that risk diminishing the appeal of an American education, making it harder for students to transition into careers that strengthen U.S. manufacturing. This would have a negative impact on the growth and international competitiveness of manufacturing in the United States, which is at odds with President Trump’s objective to bolster the domestic industry.”

What’s at stake:��The primary change under consideration “is the switch of F-1 student visas from a duration of status (“D/S”) that remains in effect for as long as the student is enrolled in an academic program to a fixed time period that corresponds to the program’s length but cannot exceed four years.”

• “This would significantly diminish the attractiveness of U.S. universities for prospective international students, because it is at odds with the length of time that many if not most students take … to actually earn their degrees.”
• That change would also make it harder for international students to secure OPT or STEM OPT extensions, in turn inhibiting their “transition into the U.S. manufacturing workforce.”

Why it matters:��“These proposed changes … would weaken manufacturers’ access to a plentiful pool of elite global talent upon which we depend to fulfill President Trump’s vision for a manufacturing renaissance in America,” the 51�Թ��� concluded.

As the federal government shutdown moves into its second week, there’s no sign of “political or practical consequences that would create enough pressure to break the impasse” (, subscription).

What’s going on:��“All signs point to another week of posturing and repeat Senate votes that fail to get the 60 votes needed to reopen the government. Congressional leaders in both parties insist that they have the upper hand and that the other side bears the blame for the shutdown.”

The background:��Funding for much of the federal government lapsed on Sept. 30 just ahead of the new fiscal year that started on Oct. 1.

• A House-passed measure to extend current funding levels to mid-November is stalled in the Senate.
• House members left Washington Sept. 19 and have yet to return.

What could be next:��Agencies could begin��federal worker layoffs if negotiations stall.��But “two labor unions have filed a legal challenge to the possible mass firings,” and some scholars have questioned the legality of such terminations during a shutdown.

The effects so far:��“[H]undreds of thousands of federal workers have been furloughed and others are working without pay. The Bureau of Labor Statistics didn’t release the monthly jobs report on its usual schedule. Some government-funded facilities, including the National Arboretum and National Gallery of Art in Washington, closed to the public.”

• Other functions, including Social Security payments, are continuing as usual.

What could be coming:��If not resolved by midmonth, the shutdown will start “weighing on consumer spending and economic growth,” as federal workers will begin foregoing paychecks.

Questions and concerns:��If your operations have been impacted, please reach out to your 51�Թ��� membership representative.

Manufacturers are increasingly adopting and using generative artificial intelligence, and it is changing their businesses for the better. But for the use of GenAI to be truly transformative, company leadership must ensure their strategy builds on six specific pillars, according to a in the Manufacturing Leadership Council’s ML Journal.

1. Establish an AI control tower: Many businesses are spending money needlessly on duplicative GenAI initiatives. Instead, they should set up an AI “control tower,” a centralized hub for AI tools and use cases that lets them reuse assets to save money and speed up implementation.
2. Reimagine future business models and functions: Rather than implementing piecemeal updates, companies should consider larger, full-scale revisions with AI. Those that don’t innovate risk being left behind.
3. Ensure confidence in AI: Keeping human team members in the loop as GenAI deployments happen will ensure employee confidence in the transformation—as will having a clearly defined set of processes and rules in place to govern algorithm and model creation and use.
4. Address talent and tech gaps: Even as the newness of GenAI implementation wears off, it’s important to continue to provide training.��A recent����survey found that 80% of workers would feel more comfortable using AI if they were trained on it.
5. Develop an ecosystem of alliances: To stay ahead of the curve, manufacturers must establish partnerships. These will be critical in filling gaps in their capabilities in an evolving landscape. Specifically, alliances in these four categories are recommended: technology, professional services, academics and data.
6. Drive focused data maturity to be AI-ready: When it comes to data maturity, company leaders should aim to be smart and focused. Not every piece of data needs to be pristine to be included in your models. Rather, a firm’s data strategy should be governed by how the data will be used.

The benefits: This strategy should address seven key needs: accessibility at scale, visibility, timeliness, openness, reliability, expansiveness and trust and security.

Nominations are open: The MLC, the 51�Թ���’s digital transformation arm, is now accepting nominations for the 2026 Manufacturing Leadership Awards. Learn more .

What do all artificial intelligence components have in common? They all have their “genesis in manufacturing,” as 51�Թ��� Vice President of Domestic Policy Chris Phalen said recently at a Climate Week����in New York City.

And for manufacturing—and by extension, AI—to thrive, we need permitting reform as soon as possible, he added.

What’s going on:����Manufacturers “are driving [AI] innovation … creating everything that we’re talking about,” Phalen told Steve Clemons, editor at large for The National Interest and emcee of a panel discussion at “AI for Real,” a talk on industrial AI presented by Siemens and Widehall last month. (Siemens USA President and CEO Barbara Humpton spoke before the panel.)

• But to lead globally in the technology, “the U.S. need[s] everything online to get AI to where we think it can go to outcompete China,” Phalen continued. “And it’s important that we don’t get into a position where there’s a competition for scarcity of electricity.��… [P]ermitting reform is going to be absolutely essential to all of that.”
• The 51�Թ��� has long emphasized the importance of permitting reform—cutting the costly, often duplicative and unnecessary federal regulations involved in getting new energy projects online—in maintaining U.S. energy dominance on the world stage and surpassing competitors in AI.

Augment, not replace:��Phalen also discussed the continuing, critical role of human workers in manufacturing, and how AI will supplement rather than replace employees.

• “People are definitely still in the picture,” he said. AI is not “a wholesale replacement; it still needs us. The future still needs us. Manufacturers are committed to having a people-centric business model going forward, but these are things that … are going to be able to augment what humans are able to do and innovate already.”

But seriously, permitting reform:��Asked what the U.S. has “to get most right to deliver on the [AI] vision” for the U.S. discussed by Humpton earlier in the event, Phalen returned to the desperate need for permitting reform.

• “It’s permitting reform,” he told Clemons. “[A]ll of the things that are going to ‘make AI for real’ are going to require permitting, and … as it stands right now, there are myriad ways it can go wrong—not just in the kind of documentation phase, but also [the] very, very long statute of limitations that allows pretty much anyone to challenge any project.”
• China, he added, is building huge amounts of energy “generation of all kinds. … We can’t tie one hand behind our back and expect to compete with that kind of generation and innovation, frankly. So it’s permitting reform.”

Photo credit:��Diane Bondareff Photography