Manufacturing Confidence Shows Cautious Rebound In February 

Manufacturing CEOs are reporting a modest uptick in current business conditions in February, reversing some of January’s year-start decline as demand shows signs of strengthening. However, persistent concerns around tariff policies and political unpredictability continue to temper optimism for the year ahead. 

That’s according to data from Chief Executive‘s CEO Confidence Index survey. The latest data was collected February 3-4 and shows that U.S. manufacturing CEOs rate current business conditions at 5.5 out of 10, on a scale where 1 is Poor and 10 is Excellent. This measure is up nearly 4 percent from the 5.3 rating in January, marking a modest reversal from the year-start slide from a 5.8 rating of current conditions in December. 

When asked about the outlook 12 months down the line, manufacturers forecast business conditions will improve to 6.0 out of 10—unchanged from January’s expectations but reflecting the cautious optimism that has characterized CEO sentiment through early 2026. This forecast remains slightly below the 6.1 rating from non-manufacturing CEOs.

The overlying theme across respondents is, once again, uncertainty and the inability to see a clear picture of business conditions 12 months down the line. Vague tariff policy and politics, along with geopolitical instability, remain significant headwinds for manufacturers specifically.  

“Our customers are still in a wait and see mode due to the amount of uncertainty going on,” says Jim Nelson, President and CEO, Parr Instrument Company. 

However, the improvement in current conditions is underpinned by signs of momentum in business and increasing demand, along with anticipation of lowered interest rates. 

“Manufacturing orders are strong, and I anticipate lower borrowing costs,” says Michael Haughey, CEO at North American Stamping Group, a company specializing in manufacturing components and systems for the automotive industry.  

Another good sign from manufacturers is the growing proportion who forecast economic growth over the next 6 months. This proportion climbed to 69 percent in February, up from 61 percent the month prior. Similarly, a growing percentage of CEOs in industries other than manufacturing also forecast economic growth over the next six months, at 65 percent in February vs. 59 percent last month. They are slightly more reserved with their forecast than manufacturers, with 14 percent forecasting a slowdown, compared to only 6 percent of manufacturers who forecast the same.  

Forecasts for changes in revenues and profits are also showing signs of optimism up this month, despite their cautious forecast for future business conditions. 

• 79 percent of manufacturers expect to increase their profits in the year ahead, up from 68 percent in January. This is the highest proportion forecasting increasing profits since January of 2025. 

• 90 percent expect to increase their revenues, up from 77 percent last month and also the highest proportion since January of 2025. 

• 56 percent expect to deploy more capital next year, up from 43 percent in January and the highest proportion since November of 2024. 

• 49 percent expect to add to their headcount over the next year, up only one percentage point from January.  

Still, international exposure plays a large role in manufacturing CEO sentiment this month, with wide gaps between manufacturers who operate internationally vs. U.S. only manufacturers emerging. Manufacturing CEOs with international exposure rate current business conditions at 5.3 out of 10 and forecast future conditions at 5.8—both notably lower than their U.S.-only counterparts, who rate current conditions at 5.7 and forecast future conditions at 6.3. This displays that internationally exposed manufacturers are pulling down the aggregate figures amid heightened concerns around tariffs, trade tensions and geopolitical instability. However, the data suggests manufacturers with international operations may be taking a proactive approach, with 66 percent planning increases to capex over the next 12 months, compared to only 40 percent of U.S.-only manufacturers.  

Part of the reason that forecasts are stalling may also be due to cost increases. 68 percent of manufacturing CEOs overall report increasing operational expenditures, regardless of international exposure. Additionally, manufacturing CEOs overall estimate the inflation rate to come in at 3.0 percent over the next 12 months, on average, higher than the 2.7 percent figure from the previous 12 months.

When looking more granularly, double the proportion of manufacturers with international exposure forecast operational expenditures to rise by 10 percent or more in 2026 vs. 2025, compared to U.S.-only firms─at 16 percent for those with international exposure vs. only 8 percent for U.S.-only. When it comes to increasing compensation per employee, 92 percent of U.S.-only manufacturers are forecasting increase vs. only 79 percent of manufacturers with international exposure. Similarly, a rough weighted average increase in healthcare costs per employee estimates that U.S.-only manufacturers are expecting an increase of over 11 percent, compared to around 10 percent for manufacturers with international exposure. 

As far as tackling these costs, manufacturers vary in their approach, with notable differences emerging between U.S.-only and internationally-exposed firms. Improving operational efficiency and productivity tops the list at 86 percent overall, though U.S.-only manufacturers use this strategy less (80 percent). 

The starkest divide appears in pricing: 79 percent of internationally-exposed manufacturers are passing costs through to customers, compared to just 52 percent of U.S.-only manufacturers—a 27 percentage point gap. Internationally exposed firms are also more likely to renegotiate suppliers (50 percent versus 24 percent), reduce headcount (32 percent versus 20 percent), and absorb costs to protect market share (34 percent versus 20 percent). 

U.S.-only manufacturers show a slight preference for reducing overhead and discretionary spending (36 percent versus 29 percent). Automation remains consistent across both groups at roughly 48 percent. 

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/