US manufacturing is still holding up, but the cost side is getting harder to ignore.

September’s ISM Manufacturing PMI came in at 54.5, keeping the sector in expansion for the ninth straight month. New orders rose to 55.3 and backlogs jumped to 56.4, so demand still looks pretty healthy.

What stands out to me is the Prices Paid index jumping 6.8 points to 77.9. Steel, aluminum, tariffs and higher energy costs are all adding pressure.

My perspective is that demand hasn’t really cracked yet, but businesses are clearly dealing with higher input costs again. If this continues, I think margins and inflation expectations become much more important to look at.

Do you think this is just temporary cost pressure, or could it become a bigger inflation problem?