U.S. manufacturing has started to pick up. Will that translate into more jobs?

This shortened President’s Day week is still a big one for economic data. Gross domestic product figures come out Friday, along with some reports covering home construction, home sales, consumer spending and inflation.

Manufacturing data from the Federal Reserve and some of its regional banks also comes out this week. Early indications suggest that manufacturing activity has been picking up so far this year.

Last year wasn’t exactly a stable one for the manufacturing sector, thanks to tariffs, high interest rates, and a shaky global economy. But in 2026, manufacturers have a few things working for them, said Scott Paul, president of the Alliance for American Manufacturing.

“The tax environment is favorable. If interest rates at least stabilize, there will be some relief for consumers and for businesses,” he said.

Paul said lower interest rates might spur more demand for appliances, vehicles, and other manufactured goods.

Plus, the big wave of artificial intelligence investment will push up demand for the equipment that goes into data centers.

“And so I think there’s a lot of potential areas for growth that could aid in the demand for manufacturing as well,” Paul said.

Manufacturers surveyed by the Institute for Supply Management last month said new orders picked up for the first time since August.

But the same report found that employment shrank at the same time.

“Even if new orders come back, it’s going to be a bit before folks start being comfortable making permanent decisions like hiring people,” said Susan Spence, chair of ISM’s manufacturing business survey committee.

She said the big factor causing manufacturers to hold off is tariff uncertainty.

“That’s kind of frozen action on folks to say we don’t know where the next one’s coming from, and even if something gets struck down, if the administration turns around and levies it in a different way, we’re in this for a while,” Spence said.

She said manufacturers have also just been through a year of slow demand. So they have plenty of capacity to make more goods without hiring new staff.

“They can put additional shifts on, or pay overtime. And I imagine that’s what they’re going to do until they see the order book is a little more solid,” she said.

That’s why manufacturing employment tends to lag behind manufacturing activity, Spence said.