ISM Manufacturing Index Surges, Signaling Capex Boom

The strong manufacturing report and other positive economic indicators suggest a potential turnaround in business investment.

Published on Feb. 3, 2026

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The Institute for Supply Management's manufacturing index surged to 52 in February, the first time it has been in expansion (over 50) in a year and the highest reading in almost four years. This positive economic indicator, along with strong regional reports and signs of improvement in the industrial sector, suggest a potential capex boom may be on the horizon, according to analysts.

Why it matters

The ISM manufacturing index is one of the most reliable and longest-running economic indicators, so its strong performance is a hugely positive sign for the broader economy. A capex boom fueled by factors like the lagged impact of Fed easing, less policy uncertainty, and a capex surge from the previous year's budget bill could drive greater activity and investment throughout 2026.

The details

The ISM warned that the results might be overly rosy, as the big jump in new orders could be companies stockpiling products ahead of rising tariffs. However, analysts say this report is not an isolated incident, pointing to strong regional economic data and signs of improvement in the industrial sector from companies like Fastenal. Economists believe sentiment is trailing the actual improvement in orders and production, and that we are starting to see the beginning of a greater wave of capex investment.

  • The ISM manufacturing index surged to 52 in February 2026, the highest reading in almost four years.
  • On Friday, the Chicago PMI regional report also showed a huge spike in new orders and employment.

The players

Nancy Lazar

An analyst at Piper Sandler who predicted last summer that a capex boom was coming, fueled by factors like the lagged impact of Fed easing and less policy uncertainty.

Chris Menzenski

An analyst at Piper Sandler who collaborated with Nancy Lazar on the capex boom prediction.

Thomas Simons

An economist at Jeffries who has also been predicting a capex boom and believes sentiment is trailing the actual improvement in orders and production.

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What they’re saying

“We think we are starting to see the beginning of a greater wave of capex investment that will drive greater activity and investment throughout 2026.”

— Thomas Simons, Economist, Jeffries (CNBC)

“Sentiment appears to be trailing the improvement in actual levels of orders and production.”

— Thomas Simons, Economist, Jeffries (CNBC)

What’s next

The judge in the case will decide on Tuesday whether or not to allow Walker Reed Quinn out on bail.

The takeaway

This strong manufacturing report, along with other positive economic indicators, suggests a potential capex boom may be on the horizon, which could drive greater activity and investment throughout 2026 and help offset concerns about the weak labor market in recent months.