2026 Second Quarter Manufacturers’ Outlook Survey
Manufacturers reported rising raw material costs as their top business challenge in the second quarter of 2026, even as optimism held near its historical average.
Manufacturers’ Outlook Survey: Second Quarter 2026
Manufacturers are reporting increased raw material costs as the top business challenge facing them, jumping 25.6 percentage points from 57.5% in the first quarter to 83.1% in the second quarter, according to the National Association of Manufacturers’ Q2 Manufacturers’ Outlook Survey. This shift comes as the conflict in the Middle East puts new pressure on manufacturers’ supply chains, with 72.0% of respondents saying their company is facing rising energy input costs as a result of the conflict. The survey also shows manufacturers’ optimism remained relatively steady, dipping to 74.2% in the second quarter of 2026, a decrease from 75.3% in the first quarter but in line with the historical average of 74.3%. The average sentiment over the past four quarters is 71.1%.
The NAM conducted the Q2 2026 Manufacturers’ Outlook Survey May 12 – 28.
Additional Findings:
- More than half (54.3%) of respondents cited industrial machinery (electrical power distribution equipment or other industrial machinery) as being “most critical” to their operations over the next 12 months. Similarly, 53.3% of respondents cited energy inputs as being critical, and about a quarter (22.1%) mentioned legacy chips. Respondents were able to check more than one response; therefore, responses exceed 100%.
- Trade continued to be top of mind for manufacturers, with trade uncertainties reported as the second top business challenge, at 71.8%, up slightly from 70.6% in Q1—and ranking as number one for companies with more than 500 employees.
- Rising healthcare costs ranked as the third top business challenge, with 76.8% of respondents reporting making business changes, such as switching insurance providers or reducing benefits or pay, as a result of increased healthcare spending.
- Sales and production are projected to rise 3.3% and 3.0%, respectively, over the next 12 months compared to the 3.8% and 3.5% growth forecasted in Q1.
- Raw material and other input costs are expected to increase 5.8%, up from 4.1% in Q1.
The NAM releases these results to the public each quarter. Further information on the survey is available here.
