U.S. Manufacturers Boost Capital-Spending Expectations, but Challenges Remain

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

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Summary

U.S. manufacturers continue to report an uptrend in expected capital expenditures and optimism, based on the latest outlook survey by the National Association of Manufacturers (NAM), although respondents indicated challenges remain. Still, Industrial Info's project data shows U.S. manufacturing industry construction remains robust.

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Latest 12-Month Outlook

The NAM survey ran from February 10 to February 26 and received 240 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 Thursday, respondents anticipated an increase of 1.7% in capital spending over the next 12 months, up from 1.4% last quarter and 1% in third-quarter 2025.

Nearly 41% of the respondents indicated they expected additional capital spending in the next year (up from 37.3% last quarter), with 42.7% predicting no change and 16.2% forecasting reduced capital expenditures. Large firms forecast the highest level of investment, projecting a 2.2% increase over the next 12 months.

That was echoed by the U.S. manufacturers' overall sentiment: 75.3% of respondents were positive about their own company's outlook, up 5.4% from the previous quarter. This marks the first time since 2023 that this outlook topped the historical average of 74.3%.

But Challenges Exist

According to the summary of findings, 70.6% of manufacturers cited trade uncertainties as a top business challenge for the fifth consecutive quarter.

This includes uncertainty regarding the future of the United States-Mexico-Canada Agreement (USMCA). Among the manufacturers that said they utilize both Mexico and Canada for critical parts of their supply chain, according to the findings, exactly half rely on both countries. Nearly 55% of respondents said they secure critical inputs from either country.

The USMCA requires that all three countries confirm they wish to continue the agreement by July 1, 2026, through a "joint review" process, in order to extend it for another 16 years. The USMCA can be maintained, renewed or altered during the process; while Mexico and the U.S. are conducting bilateral talks--and both Canada and Mexico have indicated they are looking to maintain, renew or modify the USMCA--U.S. Trade Representative Jamieson Greer has indicated all options are on the table, including pushing for revisions, canceling the agreement altogether or exploring two separate bilateral agreements.

Without an agreement, the USMCA is subject to annual reviews until 2036, which would cause further uncertainty. The USMCA is set to expire if an extension is not reached by July 1, 2036.

"Manufacturers are ready for liftoff, but the skies need to clear," said NAM President and Chief Executive Officer Jay Timmons in a press release accompanying the survey results. "This quarter shows a mixed bag of results with real momentum from tax reform, regulatory rebalancing and energy policy. At the same time, the results underscore how essential durable supply chains are to manufacturing success--and how critical Canada and Mexico are to that system, which is why we need to preserve and strengthen the USMCA."

In addition, about two-thirds of respondents reported increased volatility in their supply chains in the past 12 months, and about a quarter said volatility has "increased significantly." Only 8% cited decreased volatility over that time.

Respondents also do not expect the growth of raw material and other input costs to slow over the next 12 months, rising at the same pace as expected in the fourth quarter (4.1%). Raw material prices and other input costs rank as the third-highest business concern, after rising health care/insurance costs.

Industrial Info's U.S. Manufacturing Project Data

Despite any negative sentiment, IIR's data indicates strong project spending in the U.S. Manufacturing Industry--which spans a wide range of sectors, including automotive, data centers, distribution & warehousing, semiconductors & computers and transportation systems, among others.

Data from IIR's North American Industrial Project Spending Index for the industry shows project spending in February (the latest data available) was $808.7 billion--up 106% from $393 billion in 2025. IIR Senior Vice President of Research for Industrial Manufacturing David Pickering said this is largely attributed to the growing buildout of data centers.



Industrial Info is tracking more than 1,100 capital-spending projects, valued at more than $550 billion, within the U.S. Industrial Manufacturing Industry that are in the construction stage. Subscribers to Industrial Info's Global Market Intelligence (GMI) Project Database can view a full list of projects.

Key Takeaways

• According to a recent outlook survey, U.S. manufacturers expect an increase of 1.7% in capital spending over the next 12 months, up from 1.4% last quarter.
• Roughly 75% of respondents noted a positive outlook for their company, up 5% from last quarter.
• U.S. Industrial Manufacturing Industry project spending in February was up 106% year-over-year, according to IIR data.
• IIR data show more than $500 billion worth of manufacturing projects under construction in the U.S.

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About IIR News Intelligence
IIR News Intelligence is a trusted source of news for the industrial process and energy markets, powered by Industrial Info Resources' Global Market Intelligence (GMI).

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, IIR is tracking over 250,000 current and future projects worth $30.2 Trillion (USD).