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In October, the global manufacturing sector contracted for the fourth consecutive month, but at a slower pace than in September. Three of the five PMI components were at levels consistent with contraction. While employment declined at a faster rate than in September, new business orders and new export orders slowed their decline from the previous month. Output stabilized, rising slightly into growth territory, but stressed supply chains lengthened supplier delivery times.

A deceleration of the rate of contraction is reflective of improvement of operating conditions in China and easing of conditions in the U.S. and the Eurozone. Growth was fastest in India, Spain, Brazil and the Philippines compared to other surveyed countries.

Data broken down by sector pointed to ongoing struggles in the global industry. The intermediate and investment goods industries contracted for the fourth consecutive month, but the rate of decline eased. On the other hand, consumer goods growth continued at an increased rate.

In October, manufacturing employment is a concern, as job losses were noted for the third consecutive month and at the steepest rate since August 2020. Job cuts were reported in China, the U.S. and the Eurozone, while Canada, the UK and India registered employment growth. Nevertheless, confidence remained close to September’s reading, which was at a 22-month low. Inflationary pressures also held steady, with input prices remaining unchanged and output charges rising only slightly.

With a new administration and Congress on the horizon, the 51�Թ��� is signaling confidence in its ability to secure wins for manufacturing in the United States, highlighting both recent achievements and policy priorities moving forward.

“The 51�Թ��� has always focused on what’s best for manufacturing in America, and our track record speaks to that,” said 51�Թ��� Executive Vice President Erin Streeter. “Our approach is consistent because we know what it takes to get results.”

What we’ve delivered:��With post-partisan engagement, the 51�Թ��� has achieved historic policy wins across both recent administrations, including:

• Tax reform: The 51�Թ���’s advocacy����the 2017 tax cuts, driving billions in savings that manufacturers have reinvested in jobs, innovation and facility upgrades.
• Regulatory certainty: The 51�Թ��� has played a pivotal role in streamlining regulations,��reducing compliance costs��under the Trump administration and working to�� during the Biden years.
• United States-Mexico-Canada Agreement: The 51�Թ��� was a����for USMCA, safeguarding U.S. jobs by ensuring fairer competition and greater access to key markets.
• Energy advances:����have supported growth in domestic energy production, creating a more stable energy market.
• Infrastructure and CHIPS Act: The 51�Թ��� was instrumental in securing the historic ��and the , both critical for modernizing the economy, bolstering national security and ensuring a reliable semiconductor supply.

“These wins demonstrate what we bring to the table,” Streeter said. “By staying focused on manufacturing’s priorities, we can partner effectively with the new administration and Congress to create and protect jobs and strengthen communities.”

Looking ahead:��The 51�Թ���’s focus on core issues remains critical for keeping the sector competitive and resilient, Streeter continued. These issues include:

• Securing tax reform: The 51�Թ���’s��“” campaign aims to lock in key 2017 tax provisions that manufacturers rely on for stability and growth. “Tax reform has been a game-changer,” said Streeter. “Protecting that progress means more jobs and manufacturing-led growth across the country.”
• Regulatory certainty: The 51�Թ��� is advocating for��balanced regulations��that support competitiveness. “Manufacturers thrive with clear, fair rules,” Streeter noted. “We’re making sure Washington understands the importance of regulatory stability—and the danger of excessive regulation.”
• Energy security: The 51�Թ��� is working to��secure reliable, affordable energy��while fostering innovation in sustainability. “Energy security and grid reliability are top of mind for every manufacturer,” Streeter added. “We’re ensuring manufacturers can continue to innovate, grow and drive America forward.”

Bottom line: ��The 51�Թ��� remains focused on advocating for policies that strengthen��U.S. manufacturing. “Our success is built on trust and influence,” Streeter said. “Our members know the 51�Թ��� is a constant force, with the relationships and expertise to deliver, regardless of political changes.”

In related news, President-elect Trump has named campaign manager Susie Wiles as White House chief of staff (, subscription), a choice 51�Թ��� President and CEO Jay Timmons����“a powerful move to bring bold, results-driven leadership to the White House from day one.”

The 51�Թ��� recently interviewed Sen. Maggie Hassan (D-NH) on the importance of reinstating immediate expensing for companies’ research-and-development expenditures. Here’s the full interview:

51�Թ���: Sen. Hassan, Congress is facing a “Tax Armageddon” next year, as crucial provisions from 2017’s Tax Cuts and Jobs Act are set to expire. As a member of the Senate Finance Committee, what is your focus moving into next year’s debate?

Sen. Hassan: Next year, we will need to work to pass a tax cut package to support both American families and businesses. The package should build on the one that was negotiated in the Senate earlier this year, including a restoration of the full R&D tax deduction to support innovative businesses. The R&D tax deduction is an area where I have been particularly engaged in negotiations, and it is vital for our national security and economic competitiveness. We need to ensure that our tax policy fosters innovation, promotes the creation of good-paying jobs and keeps the United States at the forefront of technological advancement. We also need to prioritize a bipartisan expansion of the Child Tax Credit to support hardworking families and a bipartisan expansion of the Low-Income Housing Tax Credit to address our country’s housing shortage. I will continue to push for these critical measures throughout negotiations.

51�Թ���: As you know, for nearly 70 years, manufacturers in the U.S. were able to fully deduct their R&D expenses in the year incurred. Beginning in 2022, however, manufacturers were forced to spread their deductions over several years, greatly harming our ability to grow and compete. What is Congress doing to restore immediate R&D expensing?

Sen. Hassan: I first introduced bipartisan legislation with Sen. Todd Young to restore the R&D deduction back in 2020, and we’ve been pushing for its passage since. The R&D tax deduction has wide bipartisan support—our measure supporting full R&D expensing passed 90–5 in the Senate in 2022. Recently, we had a bipartisan tax cut package that included the R&D tax deduction’s restoration, but unfortunately, it was blocked in the Senate, despite passing the House with an overwhelmingly bipartisan 357–70 vote. It’s disappointing and frustrating.

51�Թ���: During your time as senator, you have seen how impactful R&D is for manufacturers to be able to compete on a global level. As we get closer to next year, what are you hearing from stakeholders on the need for pro-growth tax policy so American businesses can engage and grow around the world?

Sen. Hassan: The message I’m getting is clear—we can’t afford to fall behind in the global R&D race; it’s about American competitiveness and national security. Countries like China are offering massive incentives, including a 200% super-deduction for R&D. That puts American businesses at a real disadvantage, and I’m already hearing from business leaders across New Hampshire about how the expiration of the tax deduction is impacting their ability to plan for and make the investments that drive our economy forward.

There’s a critical national security component here too. We need to be at the forefront of designing, implementing and controlling new technologies, including those used for our national defense.

51�Թ���: Thank you, Sen. Hassan. What else can 51�Թ��� members do to stay engaged and be a resource for you going into next year?

Sen. Hassan: Your advocacy is crucial. I encourage 51�Թ��� members to keep speaking up about the ways in which R&D and tax policy specifically impacts your businesses and communities, as well as the need for bipartisan compromise. Doing so is invaluable in shaping effective legislation and getting it across the finish line.

With a “Tax Armageddon” looming at the end of 2025, Sen. Maggie Hassan (D-NH) is gearing up to fight for manufacturers. Sen. Hassan, who introduced the bipartisan American Innovation and Jobs Act (S. 866) with Sen. Todd Young (R-IN) in 2020 and reintroduced it last year, understands the importance of restoring expired manufacturing-critical tax provisions.

What’s going on: One of Sen. Hassan’s top priorities for 2025 is reinstating immediate expensing for companies’ research and development costs.

• For nearly seven decades, manufacturers could fully deduct R&D spending in the year those expenses were incurred. But since immediate R&D expensing was allowed to expire in 2022, manufacturers have been required to amortize R&D expenses over a period of years instead.
• “The R&D tax deduction … is vital for our national security and economic competitiveness,” Sen. Hassan told us in a recent interview for the 51�Թ���’s “” campaign, adding that she has “been particularly engaged in negotiations” on the topic. “We need to ensure that our tax policy fosters innovation, promotes the creation of [well]-paying jobs and keeps the United States at the forefront of technological advancement.”

Why it’s important: “The message I’m getting [from manufacturers] is clear: We can’t afford to fall behind in the global R&D race,” Sen. Hassan continued. “It’s about American competitiveness and national security. Countries like China are offering massive incentives, including a 200% super-deduction for R&D. That puts American businesses at a real disadvantage.”

What she’ll be doing: Though a bipartisan tax cut package that included a restored R&D tax deduction passed in the House earlier this year, the legislation stalled in the Senate. That’s only made Sen. Hassan vow to redouble her efforts in 2025.

• “[L]ooking ahead, I’m committed to working across the aisle to get this done because it’s crucial for our manufacturers, our economy and our national security,” she said.

What you can do: Manufacturer input and engagement are vital as Congress considers tax legislation next year, Sen. Hassan emphasized.

• “I encourage [manufacturers] to keep speaking up about the ways in which R&D and tax policy specifically impacts your businesses and communities, as well as the need for bipartisan compromise. Doing so is invaluable in shaping effective legislation and getting it across the finish line.”

Read the full interview .
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Home price growth is beginning to show signs of strain, recording the slowest annual gain since mortgage rates peaked in 2023. In August, the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index recorded a 4.2% annual gain, down from 4.8% in July.

The 10-City Composite saw an annual increase of 6.0% in August, a decrease from 6.8% the previous month, while the 20-City Composite rose 5.2% year-over-year, down from 5.9% in July. Among the 20 cities, New York again posted the highest annual gain at 8.1%, followed by Las Vegas at 7.3% and Chicago at 7.2%. Denver had the lowest annual increase at 0.7%.

On a month-over-month basis, the U.S. National Index decreased 0.1% before seasonal adjustment but increased 0.3% after adjustment. The 20-City and 10-City Composites saw declines of 0.3% and 0.4%, respectively, pre-adjustment, while both posted gains of 0.4% and 0.3%, respectively, post-adjustment.

Despite the slowdown, home prices reached an all-time high for the 15th consecutive month after accounting for seasonality of home purchases. Regionally, all markets continue to remain positive, but only barely.

Compensation costs for civilian workers increased 0.8% in the three months ending in September. In the past year, compensation costs rose 3.9%, with wages up by the same amount and benefits up 3.7%. Manufacturing compensation costs rose 0.8% in the three months ending in September and are up 3.8% in the past 12 months, with manufacturing wages up 4.0% and benefits up 3.3%.

Private industry compensation costs increased 3.6% over the year, with wages up 3.8% and benefits up 3.3%. Inflation-adjusted compensation costs rose 1.2%. Within private industry, union workers saw a 5.8% increase in compensation costs, while nonunion workers had a 3.4% increase. State and local government workers experienced a 4.7% rise in compensation costs, with wages up 4.6% and benefits up 4.8%.

Consumer confidence rebounded in October to 108.7 from 99.2 in September. October’s gain was the largest since March 2021, with all five components of the index improving.

The Present Situation Index, reflecting current business and labor market conditions, increased 14.2 points to 138.0. The Expectations Index, which reflects consumers’ short-term outlook for income, business and labor market conditions, rose 6.3 points to 89.1, well above the recession signal threshold of 80. Consumers’ assessments of current business conditions turned positive, with 21.4% of consumers saying business conditions were “good.” Views of the current labor market situation also improved from September, with a higher share of consumers saying jobs were “plentiful.” Consumers also felt more optimistic about future labor market conditions for the first time since July 2023, with more consumers anticipating more jobs to be available than less. In addition, consumers felt more positive about future business conditions and future income prospects. Meanwhile, consumers’ views of their current financial situation were essentially unchanged from the prior month.

Despite slower overall price increases, inflation expectations ticked up to 5.3% in October, and expectations for higher interest rates rose. Consumers welcomed the recent reduction in interest rates but felt the rate level was still too high. Buying plans for homes and new cars continued to rise, while purchase plans for big-ticket appliances were mixed. While response were largely positive about economic conditions, concerns about a recession dropped to a new low in October.

In October, Texas factory activity rose notably, with the production index increasing dramatically from -3.2 to 14.6, while other indicators of manufacturing were mixed. The new orders index remained negative at -3.7, indicating demand was still slightly in decline. On the other hand, both the capacity utilization index and shipments index exhibited substantial gains and moved into positive territory, registering at 4.3 and 1.5, respectively.

Overall business conditions remained negative, although pessimism abated some. The general business activity index moved up six points but remained negative at -3.0, and the company outlook index improved slightly to -3.3. The outlook uncertainty index, which has been volatile lately, ticked down less than one point to 16.4 after surging nearly 10 points in the previous month.

Labor market indicators pointed to some employment declines and shorter workweeks in October. The employment index fell eight points to -5.1, while the hours worked index inched down three points to -5.5. About 14% of firms reported net hiring, while more than 19% noted layoffs. Moderate upward pressure on prices and wages persisted. The wages and benefits index rose five points to 23.5, roughly aligned with historical averages. The raw materials prices index ticked down to 16.3, while the finished goods prices index remained relatively unchanged at 7.4.

The outlook for future manufacturing activity remained optimistic. The future production index rose to 42.4, the highest reading in nearly three years, while the future general business activity index shot up 18 points to 29.6, also a three-year high.

Real GDP grew at an annual rate of 2.8% in the third quarter of 2024, down slightly from 3.0% in the second quarter and below consensus expectations of 3.1% growth. Growth during the quarter was driven by increases in consumer spending, exports and government spending.

Consumer spending grew at an annual rate of 3.7%, with both spending on goods (up 6.0%) and services (up 2.6%) contributing to the gain. Consumer spending on nondurable goods, led by prescription drug spending, rose a strong 4.9%, while spending on durable goods, led by motor vehicles and parts spending, showed more significant growth at 8.1%. Within services, spending on health care and food services and accommodations were the largest contributors to the increase. The increase in exports (up 8.9%) primarily reflected an increase in capital goods exports, excluding automotive, while the increase in federal government spending (up 9.7%) was led by defense spending (up 14.9%).

The drags on growth came from residential fixed investment, which decreased 5.1% in the third quarter, and a downturn in private inventory investment. Nonresidential fixed investment exhibited healthy growth of 3.3%, with a key driver being business spending on equipment, which rose 11.1%. A large portion of this gain was from investment in transportation equipment, which also contributed positively to GDP in the previous quarter.

In October, U.S. manufacturing remained in contraction but at the slowest pace in three months. The S&P Global U.S. Manufacturing PMI rose to 48.5 in October from 47.3 in September, remaining below the 50 threshold that indicates a contraction in the sector. This suggests manufacturing conditions continued to deteriorate but to a lesser extent than the previous month.

Output and new orders fell at slower rates in October, with political uncertainty cited as the key reason for the drop in new orders. Despite new orders continuing to fall, manufacturers scaled back production to the smallest degree in three months. However, manufacturers continued to reduce employment and purchasing activity.

New export orders also declined slightly but to a much lesser degree than total new business, as demand weakness was notable in Europe. Weaker sales led manufacturers to reduce output for the third consecutive month. While respondents’ optimism about future business conditions strengthened, the current demand slump has resulted in firms continuing to lower their employment levels and purchasing activity as we enter the final quarter of the year.

The pace of inflation eased slightly, with input costs increasing at the slowest pace in almost a year and output price inflation also easing. Where input prices increased, respondents reported higher costs for freight and raw materials, such as cardboard, metals and packaging.