Manufacturing’s Slow-Motion Comeback: Who’s Dragging, Who’s Driving

After spending 34 of the past 36 months in contraction, U.S. manufacturing is finally edging toward recovery, though not in a straight line.

As reported in IndustryWeek, the latest quarterly business cycle snapshot from Manufacturers Alliance/Oxford Economics shows that some subsectors are expanding (and even peaking) while others remain in contraction. Pharmaceuticals, aerospace, electrical equipment, and fertilizer/agricultural chemicals are firmly in expansion mode, helping to pull the broader sector out of its trough. Primary metals such as steel are also expanding, buoyed by downstream demand from motor vehicles and aerospace, even as high costs and weaker demand from industrial machinery limit growth.

The picture isn’t uniformly rosy. Construction has shifted into contraction, squeezed by higher interest rates, rising material costs, and slower labor supply growth. These pressures will increasingly hit demand for construction machinery, which is currently at the peak of its expansion. Weakness in agriculture and mining is also dragging on specialized machinery orders.

Looking ahead, the outlook calls for softer equipment spending and industrial production. Q1 2026 demand for machinery and non-durable products is expected to decline and slide into contraction, while high-value industries like semiconductors and pharmaceuticals continue to lead total manufacturing growth.

For executives across sectors, this kind of subsector-by-subsector mapping is a reminder that manufacturing isn’t a monolith — understanding where your suppliers, customers, and capital projects sit in the cycle is a strategic advantage.