Manufacturing confidence has trailed the broader CEO population for most of 2026, averaging 5.6 on current conditions against 5.7 for CEOs overall. In September it moved to the front, and not by getting better. The sector held flat while non-manufacturing fell 6 percent.
Chief Executive’s latest CEO Confidence Index, fielded September 1-3 among more than 150 U.S.CEOs, findsmanufacturing CEOs rating current business conditions 5.8 out of 10, on a scale where 1 is poor and 10 is excellent—unchanged from August’s 2026 high, 9 percent above January’s 5.3 and above its 5.6 average for the year.Non-manufacturing CEO’s rating fell 6 percent, to5.7from 6.1.
Manufacturers trimmed their expectations for the year ahead, though only slightly: Their 12-month forecast eased to 6.0 from 6.1 in August. Non-manufacturers fell further, to 5.8 from6.1—their weakest year-ahead reading since March. Manufacturers have averaged 6.1 on that measure across 2026 against 6.0 for non-manufacturers, and September’s gap is the widest in the sector’s favor since June.
Forty-seven percent of manufacturers expect better conditions 12 months out, up from 41 percent in August anda much higher proportion thanthe31 percent of non-manufacturerswho also expect conditions to improve.“Demand” is the leading driver of manufacturers’ outlook, cited by 51 percent of respondents compared to only 46 for CEOs not in manufacturing.
For non-manufacturing CEOs, Washingtonisa bigger influencetotheir forecasts—44 percent cite policy or politics, while only 31 percent of manufacturers do the same. For non-manufacturing CEOs who expect deteriorating conditions, 59 percent point to government or geopolitics, while manufacturers spread the blame across costs,geopoliticsand demand.
Beneath the surface, however,there’sa widening split between industrial and consumer manufacturers.Industrial goods manufacturers rate current conditions 6.0 and expect 6.2 a year out. Consumer goods producers rateconditions at5.1 and forecast 5.5. The gaponcurrent conditionsgrewto 0.9 points from 0.7 in August.
On the industrial side, demand is concentrated. Asked what is driving his outlook, the CEO of a mid-sized industrial manufacturer in New Jersey points to “data centers and general construction pick up.”
Consumer producers describe a different economy. “We are a contract manufacturer for major brands,” says the CEO of a mid-sized consumer manufacturing firm in Michigan. “All of them are much softer in demand than originally forecasted.”
For someproducersthe cost pressure arrives through energy. “Geopoliticshaveincreased the cost of energy dramatically and is affecting many parts of the business,” says the CEO of a small consumer manufacturer in Massachusetts.
And for firms with global footprints, the drag is cumulative. “Uncertainty in the marketplace due to [the] Iran war, tariffs, inflation and interest rates continue to cause a drag on our business,” says the CEO of a mid-sized industrial manufacturer in North Carolina.
ECONOMIC OUTLOOK DIVERGES
On the six-month economic outlook, themanufacturers vs. CEOs in other sectorsmoved in opposite directions. Fifty-seven percent of manufacturers forecast some kind of growth, up from 54 percent in August, while the share expecting flat conditions fell to 31 percent from 35. Recession forecasts held near 12 percent, and for a second straight month not one manufacturer forecastsa severe recession. Non-manufacturers reversed August’s surge: 48 percent forecast growth, down from 69 percent, and the share expecting a mild recession or slowdown doubled to 21 percent from 10.
Manufacturers’ optimism keeps thinning, though.Just 2 percent predictstrong growth, down from 4 percent in August, leaving 86 percent clustered in mild growth or flat. Cost expectations are rising too: Manufacturers now expect headline CPI to run 3.7 percent over the next 12 months, up from 3.5 percent in August, and 35 percent expecta rate of4 percent or higher.
INTERNATIONAL EXPOSURE
The gap between internationally exposed manufacturers and domestic-only firms narrowed in September. Firms with global operations rate current conditions 5.7, unchanged from August. Domestic-exclusive firms came down from 6.1 to 5.9, cutting the gap from 0.4 points to 0.2. The convergence reflects domestic firms losing altitude, not global firms gaining it. U.S.-only CEOsremainthe more optimistic on the year ahead, at 6.2 against 5.9.
THE YEAR AHEAD
Manufacturers’ revenue expectationsheldalmost exactlywhere they were in August. Their profit expectations did not:
- 78 percent expectrevenuesto increase in 2026 (77 percent in August)
- 65 percent forecastprofitsto increase (vs.70 percentin August)
- 51 percent plan to addcapital expenditures(compared to52 percentthe month prior)
- 49 percent plan to addheadcount(vs45 percentin August)
- 82 percent foresee higheroperating expenses(vs80 percentin August)
Manufacturing runs ahead of non-manufacturersonall fivemeasures.
Profit expectations trailed revenue expectations by 7 points in August. InSeptemberthe gap is 12 points—with revenue projections mostly unchanged,but less forecastgrowinmargins. One in five manufacturers nowexpectsprofits to fall this year, up from one in six in August, and the sharebracedfor a drop of 20 percent or more has more than doubled, to 10 percent from 4the month prior. “Ability to price will get more scrutiny,” says the CEO of a large industrial manufacturer in Indiana.
The squeeze has not yet reached hiring or investment plans. Capital spending intentions wereessentially flat, and the share of manufacturers planning to add headcountrose to49 percent from 45 in August—though 39 percent still expect payrolls to stay exactly where they are, the single largest response.
WORKING CAPITAL UNDER PRESSURE
New questions this month on working capital show manufacturers running a different playbook from the rest, when answering, “which of the following working capital and liquidity priorities is your organization actively pursuing over the next 12 months?”Inventory isthe sector’smajor focus: 56percent are working to reduce inventory levels over the next 12 months, against 21percent of non-manufacturers. They are also likelier tostretchsupplier payment terms, 31 percent against 20. Non-manufacturers lead on building cash reserves, 57percent against 44.
For some, trade policy has turned a cost problem into a liquidity problem. The CEO of a large industrial manufacturer in Illinois offered three words: “Tariffs threatening cash.” Smaller firms report thin alternatives. “Traditional or bank funding for smallbusinessis an ongoing issue, as it is simply not available,” says the CEO of a small industrial manufacturer in Utah.
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. Foradditionalinformation about the Index and prior months data, visitChiefExecutive.net/category/CEO-Confidence-Index/
