ISM forecast: Economic activity to expand through '26
The U.S. economy is expected to continue to expand over the rest of 2026, say the nation’s purchasing and supply executives in the (formerly known as the Spring ISM Semiannual Economic Forecast).
Expectations for the remainder of 2026 are higher than those expressed in December 2025. The U.S. economy continues to successfully battle the headwinds posed by trade issues, continued inflation concerns, and geopolitical uncertainty.
These projections are part of the forecast issued by Institute for Supply Management (ISM) Business Survey panelists. The forecast was presented June 17 by Susan Spence, MBA, chair of the ISM Manufacturing Business Survey Committee, and Steve Miller, CPSM, CSCP, chair of the ISM Services Business Survey Committee.
Manufacturing Summary
Revenue for 2026 is expected to increase, on average, by 8.4%. This is 4 percentage points higher than the December 2025 forecast of 4.4%, and 5.9 percentage points higher than the 2.5 percent-age point year-over-year increase reported for 2025. Eighty-two percent of respondents say that revenues for 2026 will increase, on average, 12.7% compared to 2025. Seventeen% say revenues will decrease (12%, on average), and zero% indicate no change. With an operating rate of 86.9%, a projected 4.9% increase in capital expenditures, a 14.% increase in prices paid for raw materials and a marginal (1.4 percent) increase in employment expected by the end of 2026, the manufacturing sector will continue to grow through 2026. “With 14 manufacturing industries expecting revenue growth and seven industries expecting employment growth in 2026, panelists forecast a healthy rest of the year. Sentiment in each industry was generally consistent with performance reports in the May 2026 Manufacturing ISM PMI Reports, as well as the fall ISM Supply Chain Planning Forecast released in December,” says Spence.
The 14 of 18 industries that report projected revenue increases for the rest of 2026, listed in order, are: Nonmetallic Mineral Products; Paper Products; Primary Metals; Fabricated Metal Products; Electrical Equipment, Appliances & Components; Plastics & Rubber Products; Printing & Related Support Activities; Transportation Equipment; Food, Beverage & Tobacco Products; Computer & Electronic Products; Furniture & Related Products; Miscellaneous Manufacturing; Machinery; and Chemical Products.
Services Summary
Respondents expect 8.6% growth in revenues in 2026, 4 percentage points higher than the 4.6% increase forecast in December 2025. Eighty-one percent of respondents say that revenues for 2026 will increase, on average, 12.9% compared to 2025. Meanwhile, 15% expect their revenues to decrease (11.3%, on average), and 4% indicate no change. “The services sector will continue to lead the economy in 2026. Services companies are currently operating at 91.3% of normal capacity. Supply managers indicate that prices are expected to increase 8.9% over the year, reflecting increas-ing inflation. Employment is projected to grow only slightly (0.9 percentage point). Sixteen industries forecast increased revenues, the same as predicted in in December 2025,” says Miller.
The 16 services industries projecting revenue increases in 2026, listed in order, are: Mining; Retail Trade; Finance & Insurance; Wholesale Trade; Arts, Entertainment & Recreation; Other Services; Real Estate, Rental & Leasing; Public Administration; Information; Utilities; Professional, Scientific & Technical Services; Health Care & Social Assistance; Management of Companies & Support Services; Accommodation & Food Services; Educational Services; and Transportation & Warehousing.
Operating Rate
Manufacturing
Purchasing and supply executives report that their companies are operating, on average, at 86.9% of normal capacity, 4.5 percentage points higher than the figure reported in December 2025. The six industries reporting operating capacity levels above the average rate of 86.9% — listed in order — are: Nonmetallic Mineral Products; Paper Products; Primary Metals; Transportation Equipment; Computer & Electronic Products; and Fabricated Metal Products.
Organizations are operating, on average, at 91.3% of normal capacity, according to Business Survey panelists. This is 1.1 percentage points higher compared to December 2025. The eight industries operating at capacity levels above the average rate of 91.3% — listed in order — are: Mining; Retail Trade; Educational Services; Utilities; Finance & Insurance; Professional, Scientific & Technical Services; Health Care & Social Assistance; and Transportation & Warehousing.
Production Capacity
Manufacturing
Production capacity is expected to increase 9.7% in 2026. In December, panelists reported an in-crease of 2.8 percentage points for 2025 and projected an increase of 5.2% this year. Seventy-six% of respondents expect capacity increases in 2026. Sixteen percent expect decreases, on average, of 13.6 percent; and 8% expect no change. The 14 industries expecting increased production capacity in 2026 — listed in order — are: Nonmetallic Mineral Products; Wood Products; Printing & Related Support Activities; Computer & Electronic Products; Electrical Equipment, Appliances & Components; Transportation Equipment; Fabricated Metal Products; Miscellaneous Manufacturing; Plastics & Rub-ber Products; Primary Metals; Chemical Products; Machinery; Furniture & Related Products; and Food, Beverage & Tobacco Products.
Services
The capacity to produce products or provide services in the services sector is expected to increase 7.1% in 2026. This compares to an increase of 3% reported for 2025 and a December projection of a 2.1% increase for this year. Seventy-nine percent of services respondents expect their capacity for 2026 to increase, on average, 13.6%, and 14% foresee capacity decreasing, on average, 25.3%. Seven% expect no change in capacity. The 15 industries expecting production capacity increases for 2026 — listed in order — are: Mining; Retail Trade; Construction; Arts, Entertainment & Recreation; Management of Companies & Support Services; Accommodation & Food Services; Real Estate, Rental & Leasing; Wholesale Trade; Transportation & Warehousing; Professional, Scientific & Tech-nical Services; Information; Educational Services; Health Care & Social Assistance; Utilities; and Public Administration.
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