ISM Forecast Signals Manufacturing Rebound in 2026 Amid Steady Services Growth

Kelsea Ansfield
1 day ago
2 min read

The latest semiannual economic forecast from the Institute for Supply Management (ISM), released on December 16, 2025, delivers encouraging news for the U.S. economy—particularly for the manufacturing sector.

According to reporting by Jeff Berman in Logistics Management, the ISM anticipates a notable rebound in manufacturing activity in 2026, while the services sector is expected to continue its steady expansion.

Key Highlights from the ISM Forecast

Manufacturing Revenue Growth:
- Expected to rise 2.5% in 2025, a significant improvement over the 1.3% growth projected in the ISM's May report.
- A stronger 4.4% increase is forecasted for 2026.
- This optimism is backed by 56% of survey respondents anticipating higher revenues in 2026 compared to 2025.
Broader Outlook:
- Revenue gains are projected across 16 of 18 manufacturing industries.
- Capital expenditures (capex) are seen increasing by 3.5% in 2025 and 3% in 2026.
- Employment in manufacturing is expected to grow modestly by 0.4% in 2026 after a slight decline in 2025.

The services sector, meanwhile, is poised for continued steady performance, providing a stable foundation for overall economic improvement.

What This Means for Businesses

After a prolonged period of contraction in manufacturing—marked by nine consecutive months of declining PMI readings through late 2025—this forecast points to a turning point. The anticipated rebound in 2026 could signal renewed investment, increased production, and stronger demand chains.

At Gain Consulting, we view this as a prime opportunity for manufacturers and supply chain leaders to prepare strategically:

Optimize Operations: Focus on efficiency gains to capitalize on rising revenues.
Invest Wisely: Align capex plans with expected growth in key industries like fabricated metals, chemicals, and transportation equipment.
Build Resilience: Strengthen supply chains to handle potential raw material price pressures noted in the report.

As purchasing and supply executives express positive expectations, now is the time to position your organization for the upcoming expansion.

If your team needs guidance on navigating these shifts—whether through cost optimization, supply chain redesign, or growth strategy—Gain Consulting is here to help.

Source: Logistics Management, Jeff Berman, December 16, 2025; ISM Supply Chain Planning Forecast, December 2025. https://www.ismworld.org/supply-management-news-and-reports/reports/semi-annual-economic-forecast/2025/fall/