Economic Improvements Expected To Continue In 2026, ISM Reports According to the nation’s purchasing and supply manage- ment executives in the December 2025 ISM Supply Chain Planning Forecast (formerly known as the Semiannual Economic Forecast), economic improvement in the United States will continue in 2026. Revenues are expected to increase in 16 of 18 manu- facturing industries and 16 of 18 services-sector industries. Capital expenditures are expected to increase by 3 per- cent in the manufacturing sector (after a 3.5-percent in- crease in 2025) and increase by 2.5 percent in the services sector (after a 3.9-percent increase in 2025). In 2026, em- ployment is expected to grow by 0.4 percentage point in manufacturing and 2.5 percent in services. After projected growth in manufacturing and services in the first half of the year, growth in the second half is projected to accelerate in manufacturing and slightly decrease momentum in the services sector. Expectations for 2026 are positive, as 56 percent of survey respondents expect revenues to be greater in 2026 than in 2025. The panel of purchasing and supply executives expects a 4.4-percent net increase in overall revenues for 2026, compared to a 2.5 percentage point increase reported for 2025. Manufacturing industries ex- pect revenue improvement in 2026, with the largest pro- jected increases in Food, Beverage & Tobacco Products; Fabricated Metal Products; Miscellaneous Manufacturing; Computer & Electronic Products; and Chemical Products. “Manufacturing’s purchasing and supply executives ex- pect to see overall growth in 2026. They are optimistic about overall business prospects for the first half of 2026 and more excited about faster growth in the second half. According to the ISM® PMI® Reports, manufacturing was in contraction for the ninth month in a row in November. Respondents continue to expect raw materials pricing pressure in 2026 and see first-half 2025 profit margins im- proving over the second half of 2025. Manufacturers also predict growth in exports while imports stay the same in 2026,” says Spence. In the manufacturing sector, respondents report the companies operating at 82.4 percent of normal capacity, up 3.2 percentage from the 79.2 percent reported in May 2025. Purchasing and supply executives predict that cap- ital expenditures will increase year over year by 3 percent in 2026, compared to a 3.5-percent increase reported for 2025. Manufacturers expect employment in the sector to grow by 0.4 percentage point in 2026 relative to Decem- ber 2025 levels, while labor and benefit costs are expect- ed to increase an average of 2.5 percent. The Business Survey Panel predicts that prices paid for raw materials will increase 5.4 percent during the first five months of the year, with an overall increase of 4.4 percent for 2026. This compares favorably to a reported 5.4-per- cent increase in raw materials prices in 2025.
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18 January 5, 2026
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