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Manufacturing, Services Sectors Poised for Continued Expansion in 2026, ISM Says

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Manufacturing, Services Sectors Poised for Continued Expansion in 2026, ISM Says

The US manufacturing and services sectors are set for continued expansion this year despite macro and other headwinds, while raw material prices and employment are seen increasing, the Institute for Supply Management said Wednesday.

Manufacturing revenue is expected to increase by an average of 8.4% in 2026, four percentage points higher than the December forecast and 5.9 percentage points higher than last year's rate, according to the ISM's latest supply chain planning forecast.

Services revenue is expected to rise by 8.6% this year, four percentage points higher than the rate projected in December and 4.4 percentage points higher than the increase reported for 2025.

"Expectations for the remainder of 2026 are higher than those expressed in December," the ISM said. "The US economy continues to successfully battle the headwinds posed by trade issues, continued inflation concerns, and geopolitical uncertainty."

In the manufacturing sector, raw material prices are expected to increase a total of 14.1% for the year, indicating a rise of 2.2 percentage points for the rest of 2026. Employment in the sector is seen growing 1.4%.

In services, raw material prices are expected to increase 8.9% for 2026, indicating expectations of "continuing inflation," the ISM said. The sector's employment is likely to increase 0.9 percentage point this year.

Capital expenditures in the manufacturing sector are now projected to rise 4.9% this year, 1.9 percentage points higher than the December forecast, while services capex is seen growing 6.4%, compared with 2025, according to the report.

Earlier this month, an ISM survey showed that the US manufacturing sector expanded to its highest level in four years in May amid strength in demand and production, though price pressures remained elevated. A separate survey showed that the services sector grew at a faster rate sequentially last month.

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