After 2025 closed with three consecutive months of increasing confidence from manufacturing CEOs, 2026 opens in stark contrast—with a dive. Manufacturing CEOs’ forecast for future business conditions fell by over 5 percent since the last poll at the beginning of December. This is only the third time in 10 years that manufacturing CEOs’ forecast has contracted in January, a historically positive month for business forecasts, and it is the largest erosion in January over the same time frame.  

That’s according to data from Chief Executive’s CEO Confidence Index survey. The latest data was collected January 12-14 and shows that U.S. manufacturing CEOs forecast business conditions 12 months down the line to be a 6 out of 10, on a scale where 1 is Poor and 10 is Excellent. The index is down from the 6.3 out of 10 forecast in December; however, it remains on par with their sentiment from the majority of 2025. Their rating of current conditions fell even further, down 8 percent to 5.3 out of 10, from 5.8 in December.  

The driving force behind this decline is clear: uncertainty. Survey respondents in manufacturing cited unpredictability around tariffs, broader political confusion and economic headwinds as cost pressures rise as reasons for their diminished confidence.  

CEOs in other industries are aligned with manufacturers in their forecasts, also expecting business conditions 12 months down the line to stand at a 6 out of 10. Their rating of current conditions, however, is slightly better, standing at 5.6 out of 10 in January.  

Bruce Howard, CEO of Kleen-Tex, a global manufacturer of rubber products, says, “The White House’s erratic policies and actions that are pushing the U.S. into becoming pariah state,” are driving his weak forecasts for business conditions over the next 12 months.  

Tariffs remain a particularly acute concern for manufacturers, with 49 percent of manufacturing CEOs viewing trade policy as the top risk for their strategy in 2026, as far as external issues go, compared to only 14 percent of non-manufacturing CEOs. While it’s true that a minority of manufacturers see protective tariffs as beneficial, several CEOs noted that even when tariff policies might eventually stabilize, the uncertainty around implementation and potential reversals makes it nearly impossible to commit to major investments, not to mention the cost increases, supply chain disruptions and anxiety about retaliatory measures that the tariffs have already created.  

“Uncertainty around tariffs worry me. The constant fluctuation and changes make it hard to price products, continue margins and maintain inventories,” says one specialized clothing manufacturer who is focused only on North America.  

Despite the downgrade to their ratings, pockets of optimism remain. For one, CEOs’ recession forecasts in January show some confidence: 61 percent of manufacturing CEOs forecast economic growth over the coming six months—up from 55 percent the month prior. Only 11 percent of them forecast a recession, almost half the proportion who said the same last month. This is likely because many CEOs shared expectations of lower interest rates in 2026.  

Mark D’Andreta, CEO of TD Industrial Coverings, a specialized manufacturer in the automotive sector, expects mild growth over the next six months and strong rating of business conditions, explaining, “There is resilient consumer spending, fiscal and monetary policy support, reregulation, easing inflation and labor market stabilization.” 

The proportion of positive manufacturing CEOs is only slightly higher than the proportion of those who forecast the same in industries other than manufacturing: 58 percent of whom forecast economic growth over the next six months and 17 percent who forecast a slowdown. 

PRIORITIES & CHALLENGES 

CEOs in manufacturing and outside of manufacturing are aligned on their number one priority for 2026: achieving target profitability. For their second priority, manufacturers are focused on improving cost structure, something they mention often in their comments. Third for manufacturers is gaining market share, which ranks as the second priority for non-manufacturing CEOs, while improving cost structure is third.  

When it comes to their biggest forecasted challenges in 2026, manufacturers are much more unified in their selections than non-manufacturing CEOs. The top two forecasted challenges for CEOs in manufacturing are rising costs, according to 52 percent of respondents, and passing price increases through to customers, according to 51 percent of respondents. In the third spot is rising healthcare costs, which only received one third of the vote.  

For non-manufacturing CEOs, the three top challenges are rising costs (36 percent), passing price increases through to customers (36 percent) and implementing and leveraging AI effectively (35 percent).  

THE YEAR AHEAD  

Revenues and profits are significantly up this month, as is expected for end-of-year forecasts. 

• 68 percent of manufacturers expect to increase their profits in the year ahead, down 7 percent in January on the back of a 25 percent gain in December. This proportion is still higher than it was for ten out of twelve months in 2025.  

• 77 percent expect to increase their revenues, down only one percent since last month. 

• 43 percent expect to deploy more capital next year, unchanged from December. 

• 48 percent expect to add to their headcount over the next year, up 13 percent clawing back all last month’s losses.  

About the CEO Confidence Index   

Since 2002, Chief Executive Group has been polling hundreds of U.S. CEOs at organizations of all types and sizes, to compile our CEO Confidence Index data. The Index tracks confidence in current and future business environments, based on CEOs’ observations of various economic and business components. For additional information about the Index and prior months data, visit ChiefExecutive.net/category/CEO-Confidence-Index/