Manufacturing CEO Confidence Falls At Year-Start 

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 erosionin January over the sametime frame.

That’saccording to data fromChiefExecutive’s CEO Confidence Index survey. The latest data was collectedJanuary 12-14 andshows that U.S. manufacturing CEOs forecast business conditions 12 months down the lineto bea 6 out of 10,on a scale where 1 is Poor and 10 is Excellent.The index is down fromthe 6.3out of 10forecastinDecember;however, itremainson par with theirsentimentfromthe majority of2025. Their rating of current conditions fell even further, down 8percentto 5.3 out of 10, from 5.8 in December.

The driving force behind this decline is clear: uncertainty. Survey respondentsin manufacturingcited unpredictability around tariffs, broader political confusionand economic headwinds as cost pressures riseas reasons for their diminished confidence.

CEOs inotherindustries are alignedwith manufacturersin their forecasts, also expecting business conditions 12 months down the lineto 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’serratic policies and actions that are pushingthe U.S.into becoming pariah state,”are driving his weakforecastsforbusiness conditions over the next 12 months.

Tariffsremaina particularly acute concernfor 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. Whileit’s true thata minority of manufacturers see protective tariffs as beneficial,severalCEOsnoted 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 thecostincreases, supply chain disruptions and anxiety about retaliatory measuresthatthe tariffshave already created.

“Uncertainty aroundtariffsworry me. The constant fluctuation and changes make it hard to price products, continuemarginsandmaintaininventories,” says one specialized clothing manufacturer who is focused only on North America.

Despite thedowngrade to their ratings, pockets of optimism remain.For one,CEOs’ recession forecastsin January show someconfidence: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 theproportionwho said the same last month.This islikelybecausemanyCEOs shared expectationsof lower interest rates in 2026.

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

Theproportion of positive manufacturing CEOsisonly 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 17percent who forecast a slowdown.

PRIORITIES & CHALLENGES

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

When it comes to theirbiggest forecasted challenges in 2026,manufacturers aremuch more unified in their selections than non-manufacturing CEOs. The top two forecasted challenges for CEOs inmanufacturingarerising 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 andleveragingAI effectively (35 percent).

THE YEAR AHEAD

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

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

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

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

• 48percent expect to add to their headcount over the next year,up 13percentclawing 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 incurrent and future business environments, based on CEOs’ observations of various economic and business components. Foradditionalinformation about the Index and prior months data, visitChiefExecutive.net/category/CEO-Confidence-Index/