Industrial Measures End 2025 With Positive Signal for Machinery Demand

U.S. industrial activity closed out 2025 on a positive note, signaling continued momentum for machinery and manufacturing demand entering 2026.

According to the latest report from the Board of Governors of the Federal Reserve System, overall industrial production increased 0.4% from November to December 2025, while capacity utilization rose by 0.2% across the U.S. economy. Manufacturing performance trailed the broader economy slightly, with industrial production rising 0.2% and capacity utilization remaining flat during the same period.

Machinery Manufacturing Shows Strong Annual Growth

Despite modest month-over-month gains, the machinery sector demonstrated notable strength over the full year. Industrial production among machinery manufacturers increased at an annualized rate of 6.0% in 2025, aligning with a significant rise in manufacturing technology orders tracked by the U.S. Manufacturing Technology Orders (USMTO) Report, published by AMT – The Association For Manufacturing Technology.

Capacity utilization among machinery manufacturers also continued to improve, increasing in December 2025 for the fourth consecutive month, suggesting steadily rising demand and shop floor activity.

Capacity Constraints and Capital Equipment Investment

While overall capacity constraints remain below long-term historical averages, certain industries are beginning to experience pressure. Sectors that rely heavily on advanced manufacturing technology—particularly aerospace—are seeing utilization rates climb, prompting increased investment in capital equipment.

“Overall, capacity constraints are below historical averages,” said Christopher Chidzik, principal economist at AMT. “Industries relying heavily on manufacturing technology, like the aerospace sector, have been experiencing the pinch of increasing utilization rates and are responding with additional orders of capital equipment.”

Chidzik added that metalworking machinery ordered toward the end of 2025 is expected to begin arriving on shop floors in early 2026, allowing manufacturers to expand output through added capacity or improved efficiency. This development could support further increases in manufacturing production throughout the coming year.

Outlook for 2026

As new equipment installations come online, manufacturers may be positioned to respond more effectively to rising demand. Industry participants will be closely monitoring upcoming economic indicators and order data for insight into whether the positive momentum seen at the end of 2025 carries forward into 2026.

AMT will provide additional analysis and outlook during the 2026 AMT Winter Economic Forum, scheduled to be held virtually on January 30, where updated forecasts for manufacturing technology orders are expected to be discussed.