U.S. Manufacturing Subsector Business Cycle Graph
Manufacturers Alliance and Oxford Economics create this quarterly graph to illustrate where different subsectors in manufacturing currently are in their business cycle. The chart below shows their status as of Q1 2026.
Highlights from the Current Data (Mar. 2025)
- Manufacturing remains in expansion, though growth is moderating, with activity still supported by aerospace, semiconductors and components, and pharmaceuticals.
- Utilities continue to outperform, while petroleum refining and oil and gas extraction appear to be emerging from trough as elevated oil and refined product prices support margins and lift sector activity.
- Construction remains near trough but is stabilizing, with building materials positioned to benefit as rates ease and power-related investment supports demand.
- Several cyclical industries, including wood products, railroad equipment, and industrial machinery, are losing momentum as higher borrowing costs and weaker demand weigh on activity.
- Chemical output has rolled over from peak into a brief contractionary phase, pointing to slower industrial growth through mid-2026.
Forecast for Next Six Months (Sept. 2026)
- Manufacturing is projected to enter the peak of a growth cycle, with broader participation as machinery, construction, and energy-related industries move further into expansion.
- Utilities and electrical equipment are expected to remain in expansion, supported by power infrastructure and data center demand.
- Metal products and construction are forecast to move further out of trough as capital spending recovers.
- Motor vehicles are likely to lag the broader industrial base, though declines should moderate as inventory correction fades.
- Chemicals, plastics, and pharmaceuticals are expected to move into a more mature expansion phase.
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