Unfilled orders at U.S. factories rose 0.6% to $1,609.6 billion in August, and shipments stalled, the Census Bureau said in its Oct. 2 report on manufacturers’ shipments, inventories and orders. Backlogs have increased in 25 of the last 26 months. Transportation equipment accounted for $1,009.9 billion of the total and led the August increase.
Shipments were virtually unchanged at $658.6 billion, the first stall after eight monthly gains. New orders rose 0.1% to $663.5 billion. The ratio of unfilled orders to shipments rose to 6.87 from 6.81. Census does not adjust the figures for inflation.
Orders for motor vehicle bodies, parts and trailers rose 0.8%. Machinery orders rose 1.1%. Nondefense capital goods orders excluding aircraft rose 1.6%. Durable goods orders fell 0.1%, with transportation equipment down 0.7% and nondefense aircraft and parts down 4.3%.
A fabricated metal products respondent told the Institute for Supply Management the company has orders through year-end above forecast levels. “Our biggest challenge continues to be a severe shortage of workers, limiting our production output to meet demand. The second challenge is general availability of steel; the market is getting worse, and more production delays are expected as we gap out of needed material.”
Freight, diesel and steel cost more
ISM’s manufacturing index registered 54.5 in September, a tenth of a point below August, the group said in its Oct. 1 report. ISM said it was the ninth straight month of expansion after a 10-month contraction. The prices index climbed 6.8 points to 77.9, the largest move in the report. ISM said 58.6% of respondents reported paying higher prices, up from 46.2% in August.
Freight was on ISM’s list of commodities up in price for a seventh month. Diesel fuel was on it for a second. No commodity was reported down in price. The Energy Information Administration’s weekly benchmark diesel price, the figure most fuel surcharges use, set a record of $6.529 a gallon on Sept. 21, FreightWaves’ John Kingston reported.
“The Prices Index reading is still being driven by (1) increases in steel and aluminum prices that impact the entire value chain, (2) tariffs applied to many imported goods and (3) increases in petroleum-based products as a result of the Middle East conflict,” said Susan Spence, chair of ISM’s Manufacturing Business Survey Committee.
A food, beverage and tobacco products respondent told ISM that “fuel costs are still affecting transportation costs and the overall cost of goods.” A machinery respondent said higher interest rates are slowing new construction and that “we also have to face up to the higher cost of components from overseas due to tariffs and freight rates.”
ISM’s inventories index fell 2 points to 48.6 in September, back in contraction. The customers’ inventories index slipped to 41.6, a 24th month in “too low” territory. “A ‘too low’ status for the Customers’ Inventories Index is usually considered positive for future production,” Spence said.
Canada tariffs and the August import jump
The August trade figures predate Canada’s retaliation. The U.S. goods deficit with Canada widened $4.1 billion to $7.1 billion as imports from Canada rose $4.6 billion to $37.1 billion, the Census Bureau and Bureau of Economic Analysis said. Ottawa put retaliatory tariffs of 15% to 50% on about C$27.6 billion in U.S. goods on Sept. 8, FreightWaves’ Noi Mahoney reported, matching U.S. duties after talks broke down in August.
“Canada tariffs have impacted cross-border costs and left our supply chain team scrambling — those supply chains took years to develop and nurture — hurting the very lead times government buyers are concerned about,” a machinery respondent said. That respondent said orders and delivery times had both doubled in semiconductors, electronics and government work.
Goods imports rose $17.2 billion to $342.2 billion in August, and the goods deficit widened $12.8 billion to $136.6 billion. Industrial supplies accounted for $9.1 billion of the import increase. Crude oil was up $3.3 billion and nonmonetary gold $3.1 billion. Capital goods imports rose $6.2 billion, including $2.4 billion in semiconductors and $1.3 billion in other industrial machinery.
Real goods imports, in 2017 dollars, rose 4.1% to $267.7 billion, against a 5.4% nominal increase. Year to date, the goods and services deficit is down 19.9% from the same period in 2025, and total imports are up 4.4%.
“This month, it is the trade war with Canada, which every day is getting worse — causing prices to go up and uncertainty that creates massive disruption,” a transportation equipment respondent said. “Buying continues to get pushed out indefinitely as customers don’t want to spend on capital expenditures until there is more certainty of costs and demand.”
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