Survey: Middle East Conflict, Trade Loom Over U.S. Manufacturing Investment

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Written by Danny Levin, Deputy Editor for IIR News Intelligence (Sugar Land, Texas)

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Summary

The National Association of Manufacturers (NAM) found U.S. manufacturers expect capital spending will increase 1.8% over the next 12 months, although the Middle East conflict and trade uncertainties are affecting their raw material costs and supply chains.

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U.S. Manufacturing Investment

According to Industrial Info Resources data, there is $619 billion worth of projects under construction in the U.S. Industrial Manufacturing Industry, with more than half of the investment attributed to data centers and semiconductors. Another $1.28 trillion worth could kick off in the next 12 months, although not all projects will move forward as planned.

The NAM survey ran from May 12 to May 28 and received 215 responses, featuring small (those with 49 or less employees), medium-sized (between 50 and 499 employees) and large manufacturers (500 or more employees).

According to the survey results, which were released June 10, respondents anticipated an increase of 1.8% in capital spending over the next 12 months, up slightly from 1.7% in the first quarter.

Nearly 37.1% of the respondents indicated they expected additional capital spending in the next year, a decline from last quarter (41%). About 50% expect no change, while 13.6% expected reduced capital expenditures.

Strong spending in the U.S. Industrial Manufacturing Industry is reflected in Industrial Info Resources' project data, which includes the North American Construction Starts Index. The monthly index for the industry in April 2026 (the latest available data) indicated 1,477 construction starts, with a project value of $147.4 billion--up from 1,353 projects worth $107.2 billion year over year. March saw even greater growth--with a 124% jump in investment value year over year.

Middle East Conflict, Trade Uncertainties Bite

According to the summary of findings, 83.1% of the manufacturers cited increased raw material costs--largely associated with the Middle East conflict--as their top business concern. This represents a drastic increase from 57.5% in the first quarter. Trade uncertainties were the second-highest concern, buoyed by transportation and logistics costs, and supply chain challenges.

Nearly three-quarters of respondents reported the conflict has led to increased cost of energy inputs, while 43% cited higher cost of non-energy inputs.

About 54% cited industrial machinery (electrical power distribution equipment or other industrial machinery) as being "most critical" to their operations over the next 12 months. Roughly the same amount of respondents cited energy inputs as being critical.

Energy inputs refer to fuels and power used for operations, while nonenergy inputs include all other materials used (e.g. raw materials such as metals, chemicals and agricultural products.)

Respondents anticipate raw material prices and other input costs will jump 5.8% over the next 12 months, a dramatic increase from 4.1% in the first quarter. Overall, 94.4% expect an increase in raw material prices over the next year.

This will lead to increased prices across product lines over the next year, they added, reflecting decreases in expected sales and production.

Regarding existing or planned investments specifically, 42.2% of the manufacturers said they have investments supported by the U.S.-Mexico-Canada Agreement (USMCA)--which is currently in flux--and/or trade with Mexico and Canada. This included more than half of large manufacturers.

Negotiations among the countries are underway ahead of the USMCA's first mandatory joint review, which begins on July 1. At the review, each country must indicate whether it wishes to extend the agreement for another 16-year period, although negotiations can continue afterward. It is widely expected the parties will miss the deadline to renew, which would trigger annual joint reviews until all parties either agree to an extension or the agreement reaches its scheduled expiration on July 1, 2036.

If all three agree, it is automatically extended and the next review takes place six years later. Any of the countries can withdraw from the agreement with six months' notice.

Both Canada and Mexico generally want to maintain the agreement as is, but they are preparing for U.S.-demanded changes.

According to the NAM, Canada and Mexico purchase more than one-third of U.S. manufactured goods exports and serve as the United States' top two trading partners.

Industrial Info Resources offers a full list of reports for U.S. Industrial Manufacturing Industry projects under construction as well as those that could begin construction in the next 12 months.

Key Takeaways

• According to a recent survey, U.S. manufacturers expect capital spending will increase 1.8% over the next 12 months.
• But the Middle East conflict is raising raw material costs and impacting supply chains for both energy and non-energy inputs.
• $619 billion: value of U.S manufacturing projects under construction.

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About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, Industrial Info Resources is tracking over 250,000 current and future projects worth $30.2 trillion (USD).