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US manufacturing revival expected, led by advanced automated sectors
ING forecasts US manufacturing volume growth of 1.5% to 2% per year over the next three years, with advanced sectors expanding while traditional labor intensive industries keep shrinking.
ING analysts James Knightley and Coco Zhang say US manufacturing is showing signs of a revival after years of stagnation, supported by reshoring narratives, AI related investment, and defense spending.
They forecast manufacturing volume growth of 1.5% to 2% per year over the next three years, but highlight a growing split inside the sector: advanced, highly automated industries are expanding while traditional, labor intensive manufacturers continue to retrench. The analysts point to the ISM production index moving from sub 50 contraction territory to a signal of robust growth.
According to ING, AI and technology led investment is helping lift productivity in sectors with higher value added output, including pharma, tech, transport and aerospace, and electrical and power related industries. Lower value added areas, where labor costs represent a larger share, are expected to struggle unless they can command a US made premium.
ING also links the manufacturing outlook to policy and macro factors, noting that tariffs and energy security can increase the appeal of producing in the US, and that stronger US growth compared with Europe provides additional support. The analysts cite average US volume growth of 2.5% year on year from 2023 to 2026 versus 0.9% in Europe.