ISM REPORTS ECONOMIC ACTIVITY TO EXPAND THROUGH 2026
Manufacturing Expected to Expand in 2026
Revenue to Increase 8.4%
Capital Expenditures to Increase 4.9%
Capacity Utilization at 86.9%
Services Expected to Expand in 2026
Revenue to Increase 8.6%
Capital Expenditures to Increase 6.4%
Capacity Utilization at 91.3%
(Tempe, AZ) — The U.S. economy is expected to continue to expand over the rest of 2026, say the nation's purchasing and supply executives in the Spring 2026 ISM Supply Chain Planning Forecast (formerly known as the Spring ISM Semiannual Economic Forecast). Expectations for the remainder of 2026 are higher than those expressed in December 2025. The U.S. economy continues to successfully battle the headwinds posed by trade issues, continued inflation concerns, and geopolitical uncertainty.
These projections are part of the forecast issued by Institute for Supply Management® (ISM®) Business Survey panelists. The forecast was presented today by Susan Spence, MBA, Chair of the ISM Manufacturing Business Survey Committee, and Steve Miller, CPSM, CSCP, Chair of the ISM Services Business Survey Committee.
Manufacturing Summary
Revenue for 2026 is expected to increase, on average, by 8.4 percent. This is 4 percentage points higher than the December 2025 forecast of 4.4 percent, and 5.9 percentage points higher than the 2.5 percentage point year-over-year increase reported for 2025. Eighty-two percent of respondents say that revenues for 2026 will increase, on average, 12.7 percent compared to 2025. Seventeen percent say revenues will decrease (12 percent, on average), and zero percent indicate no change. With an operating rate of 86.9 percent, a projected 4.9 percent increase in capital expenditures, a 14.1-percent increase in prices paid for raw materials and a marginal (1.4 percent) increase in employment expected by the end of 2026, the manufacturing sector will continue to grow through 2026. "With 14 manufacturing industries expecting revenue growth and seven industries expecting employment growth in 2026, panelists forecast a healthy rest of the year. Sentiment in each industry was generally consistent with performance reports in the May 2026 Manufacturing ISM® PMI® Reports, as well as the fall ISM Supply Chain Planning Forecast released in December," says Spence.
The 14 of 18 industries that report projected revenue increases for the rest of 2026, listed in order, are: Nonmetallic Mineral Products; Paper Products; Primary Metals; Fabricated Metal Products; Electrical Equipment, Appliances & Components; Plastics & Rubber Products; Printing & Related Support Activities; Transportation Equipment; Food, Beverage & Tobacco Products; Computer & Electronic Products; Furniture & Related Products; Miscellaneous Manufacturing; Machinery; and Chemical Products.
Services Summary
Respondents expect 8.6 percent growth in revenues in 2026, 4 percentage points higher than the 4.6-percent increase forecast in December 2025. Eighty-one percent of respondents say that revenues for 2026 will increase, on average, 12.9 percent compared to 2025. Meanwhile, 15 percent expect their revenues to decrease (11.3 percent, on average), and 4 percent indicate no change. "The services sector will continue to lead the economy in 2026. Services companies are currently operating at 91.3 percent of normal capacity. Supply managers indicate that prices are expected to increase 8.9 percent over the year, reflecting increasing inflation. Employment is projected to grow only slightly (0.9 percentage point). Sixteen industries forecast increased revenues, the same as predicted in in December 2025," says Miller.
The 16 services industries projecting revenue increases in 2026, listed in order, are: Mining; Retail Trade; Finance & Insurance; Wholesale Trade; Arts, Entertainment & Recreation; Other Services; Real Estate, Rental & Leasing; Public Administration; Information; Utilities; Professional, Scientific & Technical Services; Health Care & Social Assistance; Management of Companies & Support Services; Accommodation & Food Services; Educational Services; and Transportation & Warehousing.
OPERATING RATE
Manufacturing
Purchasing and supply executives report that their companies are operating, on average, at 86.9 percent of normal capacity, 4.5 percentage points higher than the figure reported in December 2025. The six industries reporting operating capacity levels above the average rate of 86.9 percent — listed in order — are: Nonmetallic Mineral Products; Paper Products; Primary Metals; Transportation Equipment; Computer & Electronic Products; and Fabricated Metal Products.
Services
Organizations are operating, on average, at 91.3 percent of normal capacity, according to Business Survey panelists. This is 1.1 percentage points higher compared to December 2025. The eight industries operating at capacity levels above the average rate of 91.3 percent — listed in order — are: Mining; Retail Trade; Educational Services; Utilities; Finance & Insurance; Professional, Scientific & Technical Services; Health Care & Social Assistance; and Transportation & Warehousing.
| Operating Rate | ||||||
|---|---|---|---|---|---|---|
| Manufacturing | Services | |||||
| May 2025 | Dec 2025 | Jun* 2026 | May 2025 | Dec 2025 | Jun 2026 | |
| 90%+ | 37% | 39% | 44% | 49% | 67% | 51% |
| 50% - 89% | 55% | 60% | 53% | 48% | 32% | 44% |
| Below 50% | 8% | 1% | 3% | 3% | 1% | 5% |
| Overall Average | 79.2% | 82.4% | 86.9% | 86.5% | 90.2% | 91.3% |
*All June data reflects a reissued survey following a technical data-capture issue identified during final quality checks in May.
PRODUCTION CAPACITY
Manufacturing
Production capacity is expected to increase 9.7 percent in 2026. In December, panelists reported an increase of 2.8 percentage points for 2025 and projected an increase of 5.2 percent this year. Seventy-six percent of respondents expect capacity increases in 2026. Sixteen percent expect decreases, on average, of 13.6 percent; and 8 percent expect no change. The 14 industries expecting increased production capacity in 2026 — listed in order — are: Nonmetallic Mineral Products; Wood Products; Printing & Related Support Activities; Computer & Electronic Products; Electrical Equipment, Appliances & Components; Transportation Equipment; Fabricated Metal Products; Miscellaneous Manufacturing; Plastics & Rubber Products; Primary Metals; Chemical Products; Machinery; Furniture & Related Products; and Food, Beverage & Tobacco Products.
| Manufacturing Production Capacity | ||||||
|---|---|---|---|---|---|---|
| For 2025 | For 2026 | For 2026 | ||||
| Reported Dec 2025 | Magnitude of Change | Predicted Dec 2025 | Magnitude of Change | Predicted Jun 2026 | Magnitude of Change | |
| Higher | 33% | +12.7% | 46% | +12.6% | 76% | +15.8% |
| Same | 52% | NA | 48% | NA | 8% | NA |
| Lower | 15% | -8.8% | 6% | -11.5% | 16% | -13.6% |
| Net Average | +2.8% | +5.2% | +9.7% | |||
Services
The capacity to produce products or provide services in the services sector is expected to increase 7.1 percent in 2026. This compares to an increase of 3 percent reported for 2025 and a December projection of a 2.1-percent increase for this year. Seventy-nine percent of services respondents expect their capacity for 2026 to increase, on average, 13.6 percent, and 14 percent foresee capacity decreasing, on average, 25.3 percent. Seven percent expect no change in capacity. The 15 industries expecting production capacity increases for 2026 — listed in order — are: Mining; Retail Trade; Construction; Arts, Entertainment & Recreation; Management of Companies & Support Services; Accommodation & Food Services; Real Estate, Rental & Leasing; Wholesale Trade; Transportation & Warehousing; Professional, Scientific & Technical Services; Information; Educational Services; Health Care & Social Assistance; Utilities; and Public Administration.
| Services Production or Provision Capacity | ||||||
|---|---|---|---|---|---|---|
| For 2025 | For 2026 | For 2026 | ||||
| Reported Dec 2025 | Magnitude of Change | Predicted Dec 2025 | Magnitude of Change | Predicted Jun 2026 | Magnitude of Change | |
| Higher | 28% | +11.6% | 21% | +11.1% | 79% | +13.6% |
| Same | 68% | NA | 73% | NA | 7% | NA |
| Lower | 4% | -8.6% | 6% | -4.9% | 14% | -25.3% |
| Net Average | +3.0% | +2.1% | +7.1% | |||
PREDICTED CAPITAL EXPENDITURES — 2026 vs. 2025
Manufacturing
Survey respondents expect a 4.9 percent increase in capital expenditures in 2026, 1.9 percentage points higher than the 3 percent increase forecast by the panel in December. Sixty percent of respondents predict increased capital expenditures in 2026, 34 percent said their capital spending will decrease (on average, 23.7 percent), and 6 percent expect no change. The 10 industries expecting an increase in capital expenditures for 2026 — listed in order — are: Nonmetallic Mineral Products; Primary Metals; Printing & Related Support Activities; Computer & Electronic Products; Electrical Equipment, Appliances & Components; Miscellaneous Manufacturing; Transportation Equipment; Fabricated Metal Products; Machinery; and Food, Beverage & Tobacco Products.
Services
This year, services purchasing and supply executives expect capital expenditures to increase 6.4 percent compared to 2025. The 70 percent of respondents expecting to spend more predict an average increase of 14.4 percent, 23 percent anticipate an average decrease of 15.5 percent, and 7 percent expect no change in capital expenditures in 2026. The 15 industries expecting an increase in capital expenditures, in order, are: Mining; Retail Trade; Construction; Arts, Entertainment & Recreation; Agriculture, Forestry, Fishing & Hunting; Other Services; Public Administration; Information; Health Care & Social Assistance; Wholesale Trade; Utilities; Educational Services; Professional, Scientific & Technical Services; Finance & Insurance; and Transportation & Warehousing.
| Predicted Capital Expenditures 2026 vs. 2025 | ||||||
|---|---|---|---|---|---|---|
| Manufacturing | Services | |||||
| Predicted Dec 2025 |
Predicted Jun 2026 |
Magnitude of Change | Predicted Dec 2025 |
Predicted Jun 2026 |
Magnitude of Change | |
| Higher | 32% | 60% | +21.1% | 37% | 70% | +14.4% |
| Same | 46% | 6% | NA | 51% | 7% | NA |
| Lower | 22% | 34% | -23.7% | 12% | 23% | -15.5% |
| Net Average | +3.0% | +4.9% | +2.5% | +6.4% | ||
PRICES — Changes Between End of 2025 and June 2026
Manufacturing
In the December forecast, respondents predicted an increase of 5.4 percent in prices paid during the first four months of 2026; they now report price increases by 11.9 percent. Ninety-four percent of respondents reported that their prices are higher now than at the end of 2025 with an average increase of 13.3 percent for the early months of 2026. Five percent of respondents reported lower prices (by 13.7 percent, on average). The remaining 1 percent indicated no change for the period. Seventeen manufacturing industries reported an increase in prices paid for the first part of 2026, in the following order: Nonmetallic Mineral Products; Paper Products; Primary Metals; Transportation Equipment; Computer & Electronic Products; Fabricated Metal Products; Electrical Equipment, Appliances & Components; Wood Products; Plastics & Rubber Products; Furniture & Related Products; Printing & Related Support Activities; Apparel, Leather & Allied Products; Petroleum & Coal Products; Machinery; Chemical Products; Food, Beverage & Tobacco Products; and Miscellaneous Manufacturing.
Services
Services respondents report that purchases during the first five months of this year cost an average of 7.7 percent more than at the end of 2025. This is more than double the percentage increase predicted in December (3.8 percent). Ninety-four percent of services respondents report that prices increased, on average, 9.8 percent; 5 percent report price decreases of, on average, 26.1 percent; and 1 percent indicate no change. All 18 industries reported an increase in prices paid in the first part of 2026, listed in order: Mining; Educational Services; Finance & Insurance; Transportation & Warehousing; Construction; Public Administration; Arts, Entertainment & Recreation; Management of Companies & Support Services; Agriculture, Forestry, Fishing & Hunting; Other Services; Real Estate, Rental & Leasing; Professional, Scientific & Technical Services; Health Care & Social Assistance; Utilities; Wholesale Trade; Information; Retail Trade; and Accommodation & Food Services.
| Prices — Changes Between End of 2025 and June 2026 | ||||||
|---|---|---|---|---|---|---|
| Manufacturing | Services | |||||
| Predicted Dec 2025 |
Reported Jun 2026 |
Magnitude of Change | Predicted Dec 2025 |
Reported Jun 2026 |
Magnitude of Change | |
| Higher | 69% | 94% | +13.3% | 64% | 94% | +9.8% |
| Same | 23% | 1% | NA | 34% | 1% | NA |
| Lower | 8% | 5% | -13.7% | 2% | 5% | -26.1% |
| Net Average | +5.4% | +11.9% | +3.8% | +7.7% | ||
PRICES — Predicted Changes Between End of 2025 and End of 2026
Manufacturing
Survey respondents expect a year-over-year, net-average prices increase of 14.1 percent for 2026. With respondents reporting price increases of 11.9 percent, prices are projected to continue to increase for the rest of the year. Ninety-seven percent of respondents project prices to increase, on average, 14.6 percent for the full year, 2 percent anticipate a decrease (4.7 percent, on average), and 1 percent expect no change. The 17 industries expecting price increases for all of 2026, listed in order, are: Nonmetallic Mineral Products; Paper Products; Primary Metals; Transportation Equipment; Fabricated Metal Products; Machinery; Electrical Equipment, Appliances & Components; Wood Products; Plastics & Rubber Products; Furniture & Related Products; Printing & Related Support Activities; Apparel, Leather & Allied Products; Petroleum & Coal Products; Chemical Products; Computer & Electronic Products; Food, Beverage & Tobacco Products; and Miscellaneous Manufacturing.
Services
This year, services respondents expect prices to increase, on average, 8.9 percent compared to the end of 2025. With respondents reporting an increase of 7.7 percent through June 2026, prices are projected to increase somewhat over the rest of the year. Ninety-five percent of respondents anticipate increases of, on average, 10.5 percent; 3 percent expect decreases of, on average, 41 percent; and 2 percent do not expect prices to change. All 18 industries project price increases for all of 2026, listed in order: Mining; Retail Trade; Educational Services; Finance & Insurance; Health Care & Social Assistance; Transportation & Warehousing; Construction; Arts, Entertainment & Recreation; Management of Companies & Support Services; Accommodation & Food Services; Agriculture, Forestry, Fishing & Hunting; Other Services; Real Estate, Rental & Leasing; Professional, Scientific & Technical Services; Public Administration; Utilities; Wholesale Trade; and Information.
| Prices — Predicted Changes Between End of 2025 and End of 2026 | ||||||
|---|---|---|---|---|---|---|
| Manufacturing | Services | |||||
| Predicted Dec 2025 |
Predicted Jun 2026 |
Magnitude of Change | Predicted Dec 2025 |
Predicted Jun 2026 |
Magnitude of Change | |
| Higher | 66% | 97% | +14.6% | 65% | 95% | +10.5% |
| Same | 26% | 1% | NA | 34% | 2% | NA |
| Lower | 8% | 2% | -4.7% | 1% | 3% | -41.0% |
| Net Average | +4.4% | +14.1% | +4.2% | +8.9% | ||
EMPLOYMENT
Employment — Predicted Changes Between End of 2025 and End of 2026
Manufacturing
ISM's Manufacturing Business Survey panelists forecast that sector employment in 2026 will increase 1.4 percentage points year over year. Forty-nine percent of respondents expect employment to be, on average, 7.6 percent higher; 41 percent predict employment to decrease, on average, 5.8 percent; and 10 percent expect employment levels to be unchanged. The seven industries projecting employment growth during 2026 — listed in order — are: Electrical Equipment, Appliances & Components; Printing & Related Support Activities; Furniture & Related Products; Computer & Electronic Products; Machinery; Transportation Equipment; and Food, Beverage & Tobacco Products.
Services
Sector employment will increase 0.9 percentage point in 2026, according to the forecast of ISM's Services Business Survey panelists. For the rest of the year, 53 percent expect employment to increase, on average, 7.7 percent; 30 percent anticipate employment to decrease, on average, 10.7 percent; and 17 percent expect no change in employment levels. The nine industries anticipating increases in employment — in the following order — are: Retail Trade; Construction; Arts, Entertainment & Recreation; Real Estate, Rental & Leasing; Wholesale Trade; Professional, Scientific & Technical Services; Utilities; Information; and Educational Services.
| Employment — Predicted Changes Between End of 2025 and End of 2026 | ||||||
|---|---|---|---|---|---|---|
| Manufacturing | Services | |||||
| Predicted for 2026 Dec 2025 |
Predicted Jun 2026 |
Magnitude of Change |
Predicted for 2026 Dec 2025 |
Predicted Jun 2026 |
Magnitude of Change |
|
| Higher | 27% | 49% | +7.6% | 40% | 53% | +7.7% |
| Same | 53% | 10% | NA | 47% | 17% | NA |
| Lower | 20% | 41% | -5.8% | 13% | 30% | -10.7% |
| Net Average | +0.4% | +1.4% | +2.5% | +0.9% | ||
BUSINESS REVENUES
Business Revenues Comparison — 2026 vs. 2025
Manufacturing
Revenues are expected to increase this year as purchasing and supply management executives predict an overall net increase of 8.4 percent compared to 2025. This is 4 percentage points higher than the 4.4-percent increase forecast in December, and 5.9 percentage points higher than the 2.5-percentage point year-over-year increase reported for 2025. Eighty-two percent of respondents say that revenues for 2026 will increase, on average, 12.7 percent; 17 percent say their revenues will decrease, on average, 12 percent; and 0 percent forecast no change. The 14 manufacturing industries expecting increases in revenue in 2026 — listed in order — are: Nonmetallic Mineral Products; Paper Products; Primary Metals; Fabricated Metal Products; Electrical Equipment, Appliances & Components; Plastics & Rubber Products; Printing & Related Support Activities; Transportation Equipment; Food, Beverage & Tobacco Products; Computer & Electronic Products; Furniture & Related Products; Miscellaneous Manufacturing; Machinery; and Chemical Products.
| Manufacturing Business Revenue | ||||||
|---|---|---|---|---|---|---|
| 2025 vs. 2024 | 2026 vs. 2025 | |||||
| Reported Dec 2025 | % Change | Predicted Dec 2025 | % Change | Predicted Jun 2026 | % Change | |
| Higher | 44% | +12.1% | 56% | +8.9% | 82% | +12.7% |
| Same | 29% | NA | 36% | NA | 0% | NA |
| Lower | 27% | -10.2% | 8% | -8.1% | 17% | -12.0% |
| Net Average | +2.5% | +4.4% | +8.4% | |||
Services
Services purchasing and supply management executives predict growth in sector business revenue compared to 2025. They forecast an increase of 8.6 percent, much higher than the 4.6-percent increase forecast in December, and 4.4 percentage points higher than the 4.2-percent increase reported for 2025. Eighty-one percent of respondents indicate revenues for 2026 will increase, on average, 12.9 percent; 16 percent say their revenues will decrease, on average, 11.3 percent; and 4 percent expect no change. Sixteen of 18 services industries project revenue increases in 2026, listed in order: Mining; Retail Trade; Finance & Insurance; Wholesale Trade; Arts, Entertainment & Recreation; Other Services; Real Estate, Rental & Leasing; Public Administration; Information; Utilities; Professional, Scientific & Technical Services; Health Care & Social Assistance; Management of Companies & Support Services; Accommodation & Food Services; Educational Services; and Transportation & Warehousing.
| Services Business Revenue | ||||||
|---|---|---|---|---|---|---|
| 2025 vs. 2024 | 2026 vs. 2025 | |||||
| Reported Dec 2025 | % Change | Predicted Dec 2025 | % Change | Predicted Jun 2026 | % Change | |
| Higher | 55% | +9.3% | 54% | +10.1% | 81% | +12.9% |
| Same | 36% | NA | 36% | NA | 4% | NA |
| Lower | 9% | -9.3% | 10% | -9.9% | 15% | -11.3% |
| Net Average | +4.2% | +4.6% | +8.6% | |||
SPECIAL QUESTION TOPIC No. 1: ADJUSTING INVENTORY STOCKING STRATEGIES AMID GLOBAL TARIFF UNCERTAINTY
We asked panelists, "Have you changed your company's inventory stocking requirements to manage input pricing risks from global tariff negotiations and actions?"
Answer options:
- Yes, we are requiring higher levels of inventory
- Yes, we are requiring lower levels of inventory
- No, we haven't changed our requirements
- Do not measure input inventories
Respondents indicated:
| Adjusting Inventory Stocking Strategies | ||||
|---|---|---|---|---|
| Manufacturing | Services | |||
| Reported May 2025 |
Reported Jun 2026 |
Reported May 2025 |
Reported Jun 2026 |
|
| Yes, we are requiring higher levels of inventory | 32% | 32% | 16% | 10% |
| Yes, we are requiring lower levels of inventory | 17% | 49% | 9% | 7% |
| No, we haven't changed our requirements | 51% | 16% | 37% | 37% |
| Do not measure input inventories | 0% | 3% | 39% | 46% |
SPECIAL QUESTION TOPIC No. 2: PRICE ADJUSTMENTS IN RESPONSE TO TARIFFS
We asked panelists, "How do you plan to change your selling prices for products or services in response to tariffs?"
Answer options:
- We plan to pass on all of the cost increases into sales prices
- We plan to pass on some of the cost increases into sales prices and to absorb some through reduced margins
- We plan to pass on some of the cost increases into sales prices and to pass on the rest to other untariffed products or services we provide
- We plan to absorb all of cost increases through reduced margins
- Our costs will not be affected by tariffs, but we plan to use tariffs as an opportunity to raise prices
- Our costs will not be affected by tariffs, and we do not plan to change prices because of tariffs
Respondents indicated:
| Price Adjustments in Response to Tariffs | ||||
|---|---|---|---|---|
| Manufacturing | Services | |||
| Reported May 2025 |
Reported Jun 2026 |
Reported May 2025 |
Reported Jun 2026 |
|
| We plan to pass on all of the cost increases into sales prices | 35% | 26% | 23% | 20% |
| We plan to pass on some of the cost increases into sales prices and to absorb some through reduced margins | 52% | 46% | 28% | 22% |
| We plan to pass on some of the cost increases into sales prices and to pass on the rest to other untariffed products or services we provide | 4% | 5% | 8% | 12% |
| We plan to absorb all of cost increases through reduced margins | 3% | 17% | 14% | 20% |
| Our costs will not be affected by tariffs, but we plan to use tariffs as an opportunity to raise prices | 2% | 2% | 4% | 1% |
| Our costs will not be affected by tariffs, and we do not plan to change prices because of tariffs | 5% | 4% | 23% | 25% |
SPECIAL QUESTION TOPIC No. 3: ALTERNATIVE STRATEGIES TO NAVIGATE TRADE POLICY CHANGES
We asked panelists, "Besides raising prices, what other strategies are you implementing in response to recent or anticipated changes in trade policies?"
Answer options:
- We plan to increase inventory of imported inputs
- We plan to change the mix of products we sell
- We plan to change the specifications of products we sell
- We plan to reshore production domestically or move it to other countries
- Other (reasons)
Respondents indicated:
| Strategies Beyond Price Hikes | ||||
|---|---|---|---|---|
| Manufacturing | Services | |||
| Reported May 2025 |
Reported Jun 2026 |
Reported May 2025 |
Reported Jun 2026 |
|
| We plan to increase inventory of imported inputs | 13% | 18% | 15% | 6% |
| We plan to change the mix of products we sell | 12% | 12% | 16% | 19% |
| We plan to change the specifications of products we sell | 7% | 12% | 9% | 13% |
| We plan to reshore production domestically or move it to other countries | 40% | 38% | 20% | 30% |
| Other | 28% | 20% | 41% | 32% |
SPECIAL QUESTION TOPIC No. 4: PLANS TO RESHORE PRODUCTION
We asked panelists, "In the next six months, does your organization plan to reshore final or intermediate production from abroad?"
Answer options:
- Yes, we are actively looking into shifting production to the U.S. from abroad
- Yes, we are actively looking into shifting production domestically, but our plan will take longer than six months
- No, we are not reshoring to the domestic market but looking for alternative trade partners in less tariff-impacted countries
- No, we are not looking into changing our supply chain partners
Respondents indicated:
| Plans to Reshore Production | ||||
|---|---|---|---|---|
| Manufacturing | Services | |||
| Reported May 2025 | Reported Jun 2026 | Reported May 2025 | Reported Jun 2026 | |
| Yes, we are actively looking into shifting production to the U.S. from abroad | 8% | 7% | 8% | 5% |
| Yes, we are actively looking into shifting production domestically, but our plan will take longer than six months | 27% | 15% | 11% | 7% |
| No, we are not reshoring to the domestic market but looking for alternative trade partners in less tariff-impacted countries | 31% | 35% | 21% | 14% |
| No, we are not looking into changing our supply chain partners | 34% | 43% | 60% | 74% |
SPECIAL QUESTION TOPIC No. 5: EFFECT OF OIL PRICES
We asked panelists, "What will be the effect of the rising oil prices on your business?"
Answer options:
- Large positive effect.
- Small positive effect.
- Neutral.
- Small negative effect.
- Large negative effect.
| Effect of Rising Oil Prices | ||
|---|---|---|
| Manufacturing | Services | |
| Reported Jun 2026 | Reported Jun 2026 | |
| Large positive effect | 7% | 1% |
| Small positive effect | 7% | 3% |
| Neutral | 11% | 16% |
| Small negative effect | 46% | 55% |
| Large negative effect | 29% | 25% |
SPECIAL QUESTION TOPIC No. 6: RESPONSE TO OIL PRICE SHOCK
We asked panelists, "How do you plan to change your selling prices for products or services in response to the recent oil price shock?"
Answer options:
- We plan to pass on all of the cost increases into sales prices.
- We plan to pass on some of the cost increases into sales prices and to absorb some through reduced margins.
- We plan to pass on some of the cost increases into sales prices and to pass on the rest to other unaffected products or services we provide.
- We plan to absorb all of cost increases through reduced margins.
- Our costs will not be affected by the oil price shock, but we plan to use it as an opportunity to raise prices.
- Our costs will not be affected by the oil price shock, and we do not plan to change prices because of it.
| Pricing Response to Oil Shock | ||
|---|---|---|
| Manufacturing | Services | |
| Reported Jun 2026 |
Reported Jun 2026 |
|
| We plan to pass on all of the cost increases into sales prices. | 27% | 16% |
| We plan to pass on some of the cost increases into sales prices and to absorb some through reduced margins. | 33% | 15% |
| We plan to pass on some of the cost increases into sales prices and to pass on the rest to other unaffected products or services we provide. | 16% | 18% |
| We plan to absorb all of cost increases through reduced margins. | 22% | 23% |
| Our costs will not be affected by the oil price shock, but we plan to use it as an opportunity to raise prices. | 0% | 1% |
| Our costs will not be affected by the oil price shock, and we do not plan to change prices because of it. | 2% | 27% |
SPECIAL QUESTION TOPIC No. 7: OVERALL EFFECT OF AI ON EMPLOYMENT
We asked panelists, "What has been the overall effect of AI on employment of your business?"
Answer options:
- We are planning some layoffs after the introduction of AI.
- We are currently not hiring because of AI.
- We have created new position after the introduction of AI.
- AI so far hasn't had noticeable effects on hiring/layoff decisions at our business.
| Effect of AI on Employment | ||
|---|---|---|
| Manufacturing | Services | |
| Reported Jun 2026 |
Reported Jun 2026 |
|
| We are planning some layoffs after the introduction of AI. | 5% | 9% |
| We are currently not hiring because of AI. | 13% | 9% |
| We have created new position after the introduction of AI. | 6% | 9% |
| AI so far hasn't had noticeable effects on hiring/layoff decisions at our business. | 76% | 73% |
SPECIAL QUESTION TOPIC No. 8:SELECT AI TOOLS BEING USED
We asked panelists, "Which of the following AI tools are you using at your business?"
Answer options*:
- We don't use AI at our business.
- We use generative AI chatbots.
- We use AI agents.
- Other.
| AI Tools Used | ||
|---|---|---|
| Manufacturing | Services | |
| Reported Jun 2026 |
Reported Jun 2026 |
|
| We don't use AI at our business. | 18% | 18% |
| We use generative AI chatbots. | 51% | 54% |
| We use AI agents. | 45% | 50% |
| Other. | 8% | 9% |
- "We use generative AI chatbots."
- "We use AI agents."
- "Other."
SUMMARY
Manufacturing
- Operating rate is 86.9 percent of normal capacity.
- Production capacity is expected to increase 9.7 percent in 2026.
- Capital expenditures are expected to increase 4.9 percent in 2026.
- Prices paid increased 11.9 percent through June 2026.
- Prices of raw materials are expected to increase a total of 14.1 percent for all of 2026, indicating an expected increase of 2.2 percentage points for the rest of the year.
- Manufacturing employment is expected to increase 1.4 percent in 2026.
- Manufacturing revenues are expected to increase 8.4 percent in 2026.
- The manufacturing sector is expected to grow in 2026.
Services
- Operating rate is 91.3 percent of normal capacity.
- Production capacity is expected to increase 7.1 percent in 2026.
- Capital expenditures are expected to increase 6.4 percent in 2026.
- Prices paid increased 7.7 percent through June 2026.
- Prices of raw materials are expected to increase a total of 8.9 percent for all of 2026, indicating expectations of continuing inflation.
- Services employment is expected to increase 0.9 percentage point in 2026.
- Services revenues are expected to increase 8.6 percent in 2026.
- The services sector is projected to grow in 2026.
About This Report
In addition to the forecast, the Manufacturing ISM® PMI® Report is issued monthly on the first business day of each month and is considered by many economists to be the most reliable near-term economic barometer available. It is reviewed regularly by top government agencies and economic business leaders. The report, compiled from responses to questions asked of purchasing and supply executives across the country, tracks industrial production, new orders, inventories, supplier deliveries, employment, buying policies and prices. Manufacturing Business Survey panelists are divided into the following NAICS code categories: Food, Beverage & Tobacco Products; Textile Mills; Apparel, Leather & Allied Products; Wood Products; Paper Products; Printing & Related Support Activities; Petroleum & Coal Products; Chemical Products; Plastics & Rubber Products; Nonmetallic Mineral Products; Primary Metals; Fabricated Metal Products; Machinery; Computer & Electronic Products; Electrical Equipment, Appliances & Components; Transportation Equipment; Furniture & Related Products; and Miscellaneous Manufacturing (including products such as Medical Equipment & Supplies, Jewelry, Sporting Goods, Toys & Office Supplies).
Covering the services sector, ISM® debuted the Services ISM® PMI® Report in June 1998. The Services ISM® PMI® Report is released on the third business day of each month and is based on data received from purchasing and supply executives from 18 different Services industries across the country. The Services ISM® PMI® Report is diversified by NAICS, based on each industry's contribution to gross domestic product (GDP). The Services Business Survey panelists are divided into the following NAICS code categories: Agriculture, Forestry, Fishing & Hunting; Mining; Utilities; Construction; Wholesale Trade; Retail Trade; Transportation & Warehousing; Information; Finance & Insurance; Real Estate, Rental & Leasing; Professional, Scientific & Technical Services; Management of Companies & Support Services; Educational Services; Health Care & Social Assistance; Arts, Entertainment & Recreation; Accommodation & Food Services; Other Services (including Equipment & Machinery Repairing; Promoting or Administering Religious Activities; Grant making; Advocacy; and Providing Dry-Cleaning & Laundry Services, Personal Care Services, Death Care Services, Pet Care Services, Photofinishing Services, Temporary Parking Services, and Dating Services); and Public Administration. The report covers business activity, new orders, backlog of orders, new export orders, inventory change, inventory sentiment, imports, prices, employment, and supplier deliveries.
About Institute for Supply Management®
Institute for Supply Management® (ISM®) is the first and leading not-for-profit professional supply management organization worldwide. Its community of more than 50,000 in more than 100 countries manages about US$1 trillion in corporate and government supply chain procurement annually. Founded in 1915 by practitioners, ISM is committed to advancing the practice of supply management to drive value and competitive advantage for its members, contributing to a prosperous and sustainable world. ISM empowers and leads the profession through the ISM® PMI® Reports, its highly regarded certification and training programs, corporate services, events and assessments. The ISM® PMI® Reports, Manufacturing, and Services are two of the most reliable economic indicators available, providing guidance to supply management professionals, economists, analysts, and government and business leaders. For more information, please visit: www.ismworld.org
ISM PMI Content
The Institute for Supply Management® ("ISM") PMI® Reports (both Manufacturing and Services) ("ISM PMI") contains information, text, files, images, images, video, sounds, musical works, works of authorship, applications, and any other materials or content (collectively, "Content") of ISM ("ISM PMI Content"). ISM PMI Content is protected by copyright, trademark, trade secret, and other laws, and as between you and ISM, ISM owns and retains all rights in the ISM PMI Content. ISM hereby grants you a limited, revocable, nonsublicensable license to access and display on your individual device the ISM PMI Content (excluding any software code) solely for your personal, non-commercial use. The ISM PMI Content may also contain Content of users and other ISM licensors. Except as provided herein or as explicitly allowed in writing by ISM, you may not copy, download, stream, capture, reproduce, duplicate, archive, upload, modify, translate, publish, broadcast, transmit, retransmit, distribute, perform, display, sell, or otherwise use any ISM PMI Content.
Except as explicitly and expressly permitted by ISM, you are strictly prohibited from creating works or materials (including but not limited to tables, charts, data streams, timeseries variables, fonts, icons, link buttons, wallpaper, desktop themes, on-line postcards, montages, mash-ups and similar videos, greeting cards, and unlicensed merchandise) that derive from or are based on the ISM PMI Content. This prohibition applies regardless of whether the derivative works or materials are sold, bartered, or given away. You may not either directly or through the use of any device, software, internet site, web-based service, or other means remove, alter, bypass, avoid, interfere with, or circumvent any copyright, trademark, or other proprietary notices marked on the Content or any digital rights management mechanism, device, or other content protection or access control measure associated with the Content including geo-filtering mechanisms. Without prior written authorization from ISM, you may not build a business utilizing the Content, whether or not for profit.
You may not create, recreate, distribute, incorporate in other work, or advertise an index of any portion of the Content unless you receive prior written authorization from ISM. Requests for permission to reproduce or distribute ISM PMI Content can be made by contacting in writing at: ISM Research, Institute for Supply Management, 350 W. Washington St. — Papago Gateway, Suite 301, Tempe, AZ 85288-1495, or by emailing kcahill@ismworld.org, Subject: Content Request.
ISM shall not have any liability, duty, or obligation for or relating to the ISM PMI Content or other information contained herein, any errors, inaccuracies, omissions or delays in providing any ISM PMI Content, or for any actions taken in reliance thereon. In no event shall ISM be liable for any special, incidental, or consequential damages arising out of the use of the ISM PMI. Manufacturing PMI® and Services PMI® are registered trademarks of Institute for Supply Management®. Institute for Supply Management® and ISM® are registered trademarks of Institute for Supply Management, Inc.
The full text version of each monthly report is posted on www.ismrob.org on the first and third business days of every month* after 10:00 a.m. (ET).
The next Manufacturing ISM® PMI® Report featuring the June 2026 data will be released at 10:00 a.m. ET on Wednesday, July 1, 2026.
The next Services ISM® PMI® Report featuring the June 2026 data will be released at 10:00 a.m. ET on Monday, July 6, 2026.
*Unless the New York Stock Exchange is closed.
Please note that you or the organization you represent may not create, recreate, distribute, incorporate in other work, or advertise an index or any portion of the ISM® PMI® Reports – Manufacturing (PMI®) or Services (PMI®) content unless you receive prior written authorization from ISM. Requests for permission to reproduce or distribute ISM PMI® Content can be made by contacting us in writing at:
ISM Research
Institute for Supply Management
C/O Corporate Services
350 W Washington St,
Suite 301
Tempe, AZ 85288
or by emailing us at (Subject: Content Request)
corpinfo@ismworld.org