February and March marked an unexpectedly optimistic period for U.S. manufacturers, during which confidence improved steadily amid burgeoning geopolitical volatility and a developing supply crisis overseas. This month, however, the stressors of international conflict and rising prices have finally cast a shadow over confidence in the business environment in the sector.
According to Chief Executive’s latest CEO Confidence Index Survey, fielded April 7-9 among 416 U.S. CEOs, U.S. manufacturers are showing moderation: They rate current business conditions a 5.5 out of 10, on a scale where 1 is Poor and 10 is Excellent––on par with February 2026 figures. While down 4 percent since March, this rating is still higher than where the Index began the year (5.3 out of 10).
When asked how that may change over the next 12 months, manufacturers say they expect improved conditions, projecting business conditions will rise to 6.0 out of 10 by this time next year. Down 3 percent since March, this forecast hovers around where it sat the first two months of the year.
Non-manufacturers followed a different trend yet again in April, with current ratings holding steady at 5.5 out of 10 and future forecasts increasing 3 percent since March despite being presented with the same set of stressors as their more pessimistic peers.
When asked to explain the core driving factors behind their forecasts, U.S. manufacturers largely had two things to say: the supply chain effects of instability abroad and consumer behavior.
Some specifically noted the rising costs of fuel as integral to their economic outlook: “Geopolitics and the increased cost of energy is and will continue to have a negative impact on virtually all aspects of the economy,” says John W. Gessert, CEO of American Plastic Toys, a mid-sized consumer manufacturing firm headquartered in Michigan.
Chris Highfield, President of Pennant Moldings, a family-owned industrial manufacturing firm, agrees, also highlighting the pressure of decreased consumer spending: He notes “uncertainty with the Iranian conflict” and “rising costs driven by fuel pricing and [a] reduction of disposable income as consumers spend less” as integral to his projection.
Other manufacturers describe a struggle to accurately conduct long-term planning under such turbulent conditions. Peter Ensch, CEO of Sani-Matic, a large-sized manufacturing firm with international operations, says “there continues to be too much uncertainty largely driven by the current administration’s changes in direction, tariff/trade policy and geopolitics that make it very difficult to develop and implement longer term planning.”
All in all, manufacturers are less divided in their driving factors than they were last month, when they could be roughly sorted by their focus on long-term versus short-term goals. This month, nearly three-quarters of manufacturing CEOs noted geopolitics in some regard, tying the sector together and defining itself clearly as a core issue.
Recession forecasts show a significantly negative turn for manufacturers this month: 25 percent expect some kind of recession in the next six months, a staggering 127 percent increase since March (when just 11 percent expected the same). The proportion of manufacturers projecting growth decreased in tandem, from 67 percent in March to just 48 percent in April. Nonetheless, the largest proportion still shares a positive outlook, indicating moderation in response to stressors instead of a nosedive.
When it comes to the situation in the Middle East, there is a subtle divide in the sector: 77 percent of consumer manufacturers report negative impacts, in comparison to just 73 percent of their industrial-focused peers. While geopolitical volatility centered in this region is clearly a core factor for both groups, the longer cycles and B2B structure of many industrial manufacturers is perhaps providing them some insulation from the turbulence.
Though business confidence forecasts followed a pattern of moderation, year-ahead forecasts saw some of the largest decreases in months:
- 61 percent of manufacturers forecast profits to increase in 2026 vs. 2025 (down from 74 percent last month)
- 73 percent expect revenues to increase this year (down 10 percent since March)
- 44 percent plan to add to their headcount in 2026 (down from 57 percent last month)
The percentage of those planning to add to their capital expenditures took a fascinating turn this month, increasing by 65 percent as the other categories fell: 86 percent now plan increases, in comparison to just 52 percent in March. This is potentially a signal of structural change for some, as manufacturing firms invest in internal development to navigate the year ahead.
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/
