MHI Solutions Improving Supply Chain Performance
THE U.S. ECONOMY enters 2026 with renewed momentum for further upside, following a year of on‑trend improvements across the manufacturing and supply chain sectors. Throughout much of 2025, both the Institute for Supply Management (ISM) Manufacturing Purchasing Managers’ Index (PMI) and MHI Business Activity Index (BAI) posted meaningful gains, signaling improvements despite elevated policy and trade uncertainty.
Following a pandemic‑era surge and the subsequent period of slowdown and stagnation, primarily driven by higher interest rates, manufacturing activity trended upward through 2025, setting the stage for continued expansion in 2026. While policy, trade and geopolitical risks remain significant, economic data now reflect the potential for improving growth and strengthening across U.S. industry and supply chain networks, especially with lower interest rates, a weaker dollar and reindustrialization of the U.S. economy as it moves toward what increasingly appears to be a wartime‑ready footing.
POLICY UNCERTAINTY AND STRATEGIC REALIGNMENT
The U.S. economy continues to face high levels of policy uncertainty, particularly related to trade, tariffs, immigration and geopolitical risks. Still‑elevated interest rates remain a drag, but recent Fed rate cuts, along with prospects for even lower rates in 2026, have improved the outlook. The potential tailwinds of lower costs of capital could further support the momentum in manufacturing and material handling in the year ahead.
Even though uncertainty spiked in 2025, the real economy showed signs of resilience. Capital planning became more difficult, but the same forces of uncertainty also accelerated long‑term structural change. Companies across industries expanded reshoring, nearshoring and friendshoring strategies to build resilience and align with national security and industrial policy goals. These shifts are expected to sustain capital spending and material handling investment through 2026 and beyond.
SUPPLY CHAIN SHAKEUPS COULD BENEFIT MATERIAL HANDLING
Due to elevated geopolitical and trade uncertainty, companies and countries alike are restructuring supply chains through duplicative sourcing, reshoring and regionalized production. These are no longer optional tactics, but rather, they have become strategic imperatives central to U.S. grand strategy.
The U.S. push for economic self‑sufficiency, reindustrialization and supply chain resilience is laying the groundwork for long‑term investment in domestic logistics, manufacturing and material handling infrastructure. Despite modest International Monetary Fund (IMF) global growth forecasts and the Federal Reserve’s cautious policy stance in 2025, new opportunities for material handling and logistics firms have increased.
The evidence is clear in the data: the MHI BAI by Prestige Economics has shown material handling outperforming broader manufacturing, reinforcing the view that this sector stands to benefit disproportionately from America’s ongoing industrial transition.
STRATEGIC OPPORTUNITIES WITH A BACKDROP OF REAL RISKS
Risks remain real and significant. Tariffs on key inputs like steel and aluminum are raising costs and compressing margins for a number of manufacturers and material handling companies. Meanwhile, retaliatory tariffs abroad could also threaten exports and cost competitiveness. And monetary policy uncertainty continues to complicate investment strategies.
However, these challenges could also catalyze decisive actions that add long‑term value. Businesses are re‑engineering supply chains, moving factories closer to end markets and investing in redundant and resilient production networks to mitigate shocks. While this realignment will take years, early signs of opportunity are already visible.
The push toward friendshoring and nearshoring critical inputs is driving demand for expanded material handling capacity, warehouse automation, smarter inventory systems and advanced logistics solutions. These structural shifts are transforming material handling from a background operational function into a strategic growth engine for the U.S. economy.
THE MATERIAL HANDLING ADVANTAGE
In an era defined by Cold War Two® geopolitical tensions, supply chain resilience has become a cornerstone of economic security. U.S. industrial policy is increasingly designed to incentivize domestic production and logistics capabilities, strengthening national security through economic means.
Whether it’s defense manufacturing, advanced technology production, shipbuilding or other heavy industrial manufacturing, the success of the reindustrialization effort will depend on efficient, resilient and technologically advanced material handling systems. As geopolitical risks mount, including the growing potential for conflict between China and Taiwan, America’s logistics and material handling capabilities could prove strategic assets that enhance deterrence and sustain industrial readiness.