Manufacturing capital expenditures in the United States are expected to rise 3 per cent in 2026 following a 3.5 per cent increase in 2025, while employment is set to expand with manufacturing headcount up about 0.4 percentage point, according to the Institute for Supply Management’s December 2025 Supply Chain Planning Forecast. Revenues are forecast to increase in 16 of 18 manufacturing industries next year, with overall manufacturing revenues seen growing a net 4.4 per cent in 2026 compared with a 2.5 per cent rise in 2025.
The outlook reflects improving confidence among purchasing and supply management executives, who said after moderate growth in the first half of 2025, manufacturing activity is projected to accelerate in the second half of 2026. Despite the sector remaining in contraction for the ninth consecutive month in November, executives expect a turnaround as the year progresses.
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Manufacturers reported operating at 82.4 per cent of normal capacity in late 2025, up from 79.2 per cent in May, and production capacity increased 2.8 per cent in 2025; it is expected to expand by 5.2 per cent in 2026 supported by hiring, investment in plant and equipment, longer hours and the replacement of older machinery with advanced technology.
Raw material prices paid rose 5.4 per cent in 2025 and are forecast to increase 4.4 per cent in 2026, while labour and benefit costs are expected to rise 2.5 per cent amid continued wage pressures. Export activity is anticipated to grow in the first half of 2026 as imports stay broadly unchanged and inventory-to-sales ratios edge lower, reflecting firms’ focus on working capital discipline.
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Despite expectations of growth, survey respondents are slightly less optimistic about 2026 than they were about 2025: 44 per cent believe conditions will improve next year, 37 per cent expect them to stay the same and 19 per cent foresee a downturn, resulting in a diffusion index of 62.4 per cent, marginally below the 63.5 per cent recorded for 2025.
