Industrial Supply Distributors NAICS 423840

Oct 8, 2025 - Manufacturing Activity Edges Upward, But Tariffs Sting

• Activity in the US manufacturing sector edged up in September, though new orders and employment were subdued as factories grappled with the fallout from President Trump's sweeping tariffs on imports, Reuters reports. Manufacturing activity, which drives demand for industrial supplies, contracted for the seventh consecutive month, according to the Institute for Supply Management’s September Manufacturing PMI Report. The Supplier Deliveries Index signaled slower delivery performance for the second straight month, while the Inventories Index worsened in September compared to August. Indexes of new orders and employment also reflected contraction in September. Of the six largest manufacturing industries, only one (Petroleum & Coal Products) expanded in September, compared to two in August, per ISM’s report. Inflation and tariffs, including the related paperwork, are impacting manufacturers’ purchasing decisions and depressing factory activity.
• The Trump administration’s on-again, off-again tariff strategy is sending ripples through the industrial sector, significantly impacting production costs, supply chains, and overall competitiveness in the machinery and industrial equipment sector, Manufacturing.Net reports. The implementation of an additional 10% tariff on Chinese imports, suspension of de minimis exemptions for Chinese shipments, and newly announced (and since delayed) 25% tariffs on goods from Mexico and Canada, are causing confusion and requiring manufacturers to quickly adapt to mitigate potential cost spikes and avoid supply disruptions. Manufacturers looking to reshore operations to avoid tariffs and shorten their supply chains are an opportunity for domestic industrial supply distributors. However, rising recessionary fears could cause existing and potential customers to delay or cancel new orders. In March, Goldman Sachs raised the probability of a US recession to 35% from 20%, amid tariff turmoil and economic uncertainty.

• The US manufacturing sector – a driver of demand for industrial supplies – began 2025 on a long-awaited positive note, with economic activity in the sector expanding in January following 26 consecutive months of contraction, according to the latest Manufacturing ISM Report On Business, which surveys US supply executives. “Demand clearly improved, while output expanded and inputs remained accommodative,” the Institute for Supply Management's (ISM) Timothy R. Fiore, chair’s ISM’s Business Survey Committee, said. The Manufacturing PMI registered 50.9% (above 50 indicates expansion) in January, 1.7% higher compared to the seasonally adjusted 49.2% recorded in December. Per ISM’s January report, demand and production improved, and employment expanded. The eight manufacturing industries reporting growth in January (in order) were: Textile Mills; Primary Metals; Petroleum & Coal Products; Chemical Products; Machinery; Transportation Equipment; Plastics & Rubber Products; and Electrical Equipment, Appliances & Components. Eight industries reported contraction including Nonmetallic Mineral Products and Wood Products.
• Producer prices for machinery and supply wholesalers, a measure of input costs including supplies and labor, rose 2.9% in August compared to a year ago, after falling 1.3% in the previous August-versus-August annual comparison, according to the latest US Bureau of Labor Statistics data. The inventory-to-sales ratio for machinery and equipment wholesalers, a measure of the amount of inventory on hand compared to the number of orders being fulfilled, was 2.9 in July, down 4.9% from a year earlier but up 2.8% from June. Employment by industrial supplies merchant wholesalers shrank 3.5% year over year in July, while the average industry wage rose 15.4% over the same period to a new high of $32.87 per hour, BLS data show.