U.S. Manufacturing Subsector Business Cycle Graph
Manufacturers Alliance and Oxford Economic 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 Q2 2025.
Highlights from the Current Data
- Manufacturing moved into an early phase of acceleration, led by electrical equipment, semiconductors, and aerospace – the latter benefiting from recovery at Boeing and strong spending on defense, missile production, and space launches, including satellites.
- Metalworking manufacture is a beneficiary of the nascent recovery in manufacturing.
- Oil and gas mining has performed well in recent months, with production reaching all-time highs. However, recent softness in prices are expected to reign in further output gains in the second half of 2025. Petroleum refining is also near a production high point, but we expect demand will slacken in the second half of 2025.
- Construction is being hurt by high interest rates and the higher cost of materials and labor.
Forecast for Next Six Months
- Manufacturing will suffer a tariff shock in the second half of 2025, but look forward to renewed demand in 2026 based on recent tax and budget legislation boosting demand.
- Construction will end a multi-year decline in 2026 and begin recovery by the second half of the year, helped by spending on new facilities for manufacturing and power generation.
- Steel production will work through a sharper phase of contraction in H2 2025 but see recovery in line with faster construction and manufacturing activity in 2026.
- Rubber production, while already in a declining phase, is likely to remain subdued, reflecting continued weakness in automobile and motor vehicle parts manufacturing.
Underwriters
