U.S. Manufacturers More Optimistic In May, Despite Continued Volatility

The combination of international conflict, price volatility, regulatory change and looming inflationary conditions has created a multi-pronged threat for manufacturing leaders since late 2025. While those stressors continue to cast a dark shadow over their current business sentiment, most U.S. manufacturers are convinced that resolve is to come in the year ahead. 

According to Chief Executive’s latest CEO Confidence Index Survey, fielded May 5-6 among 342 U.S. CEOs, manufacturers are holding steady, rating current business conditions a 5.5 out of 10, on a scale where 1 is Poor and 10 is Excellent. The Index has hovered around this 5.5/10 rating since February 2026, when the conflict in the Middle East intensified and supply chain effects became a core concern for manufacturing leaders. Nonetheless, the Index is still in a better place than it was throughout most of last year. 

When asked how that may change over the next 12 months, manufacturers say they expect improved conditions, forecasting they will rise to 6.0 out of 10 by this time next year. Up 2 percent since April, this turn toward optimism—an outlook that 52 percent of U.S. manufacturers share—has recovered some of the losses felt when the Index fell 3 percent last month. 

Manufacturers continue to follow a different pattern than the majority of CEOs polled in May, with overall ratings of current conditions improving slightly and future forecasts declining 1 percent since April as more CEOs adopt a “wait and see” perspective. 

Some manufacturers attribute their shift toward optimism to improved demand, especially in the technology and consumer products sub-sectors, and the presence of indicators that volatility will resolve before 2027. 

Randy Colwell, CEO of the mid-sized industrial manufacturer Holloway America, shares a perspective polarized by the continuity of current stressors, yet nonetheless hopeful for resolve: “Right now, our market … is strong [and] material costs are steady, but higher interest rates and fuel costs may worsen the market. … Especially if the war in Iran slows, we see good growth in the next 12 months.” 

Others agree: “I believe the interest rates will be lower [in the year ahead] … also, the tariff refund will drive growth,” says Art Hamilton, president of the mid-sized industrial fabrics manufacturer Hamilton International. 

Still, other manufacturers hope for a “slowdown in accelerating costs” and “growing market share through innovation.” 

That optimistic conviction has produced an improvement in recession forecasts in May, after they dramatically worsened last month with a triple-digit increase in the proportion of manufacturers expecting a recession. Exactly half project growth this month, up from 48 percent last month. While the proportion still forecasting recessionary conditions is sizeable at 23 percent, this is nonetheless an improvement from April’s 25 percent. 

Although non-manufacturers took a more pessimistic turn when it comes to Index forecasting, they continue to be more optimistic than their peers. 53 percent now expect some kind of growth in the next six months, up from 47 percent in April. 

One of the necessary tools manufacturing leaders are using to navigate this turbulent environment is undoubtedly artificial intelligence, and they are bullish on its capabilities for improving profits by 2031. 

When asked about the level of impact AI has on current company profitability, most U.S. manufacturers (58 percent) reported that it has no impact. This reflects, perhaps, the fact that many organizations are still in the process of onboarding AI technologies and clearly defining how they can produce a ROI. 

When the time span changed, however, most manufacturing CEOs shared a different perspective: 86 percent forecast that AI will have some kind of positive impact on profitability 5 years from now, with the majority describing that impact as moderate. 

Non-manufacturers, in comparison, tend to be even more bullish on AI: 37 percent forecast a significant positive AI-driven impact on profitability 5 years down the line. 

A slim minority of either group forecast net negative effects related to AI by 2031: 2 percent of manufacturers and 4 percent of non-manufacturers. 

Year-ahead forecasts are healthily optimistic this month, after several categories suffered losses in April: 

• 69 percent of manufacturers forecast profits will increase in 2026 vs. 2025 (up from 61 percent last month) 

• 76 percent forecast revenues to increase this year (up from 73 percent in April) 

• 41 percent plan to add to their capital expenditures (down from 86 percent last month, when manufacturers were unusually optimistic) 

• 51 percent plan to add to their headcount in 2026 (up from 44 percent in April) 

• 77 percent foresee additions to their operating expenditures (a new category returned to in May) 

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/