Economic growth remains steady nationally and in North Carolina, but manufacturers are operating in a business environment still shaped by workforce shortages, inflation pressures, and global uncertainty. 

Those issues were front and center during the latest meeting of the NC Chamber Manufacturing Council, where members heard from Matt Martin, regional executive at the Federal Reserve Bank of Richmond, on the economic trends likely to shape business decisions in 2026. 

Martin highlighted both the resilience of the economy and the challenges manufacturers should continue to watch in the months ahead. 

Trends Manufacturers Should Watch 

Several trends are shaping the current economic landscape and influencing how manufacturers and employers across North Carolina plan, invest, and grow. 

1. Economic growth is solid — but uneven.

The national economy continues to grow at a steady pace, with early projections suggesting the current quarter could meet or exceed long-term trend growth. However, that growth is increasingly concentrated in specific areas. 

Martin noted consumer spending gains are largely being driven by higher-income households, while business investment has surged in sectors such as advanced manufacturing and digital infrastructure, including data center construction. Manufacturing investment in particular has grown significantly since the pandemic, as companies continue to adapt supply chains, strengthen resilience, and expand domestic production capacity. 

For manufacturers, that means the overall economic outlook is positive, but demand and investment are not being felt evenly across every business or industry segment. 

2. Productivity gains are helping offset slower job growth. 

While economic growth has remained strong, employment growth has slowed across much of the economy. 

Productivity gains are helping explain the disconnect. Following post-pandemic labor shortages, many manufacturers invested heavily in automation, operational efficiencies, and technology. Those investments are paying off. 

Artificial intelligence is also improving productivity and helping workers operate more efficiently, though Martin emphasized that most businesses are currently using the technology to complement workers rather than replace them.  “There are going to be many cases where AI is a complement to workers, not a substitute,” he said. 

3. Workforce shortages remain a long-term challenge. 

Even as hiring has slowed in some sectors, labor shortages are still one of the most persistent challenges facing manufacturers. 

Demographic trends are contributing to the issue. Retiring baby boomers, slower immigration growth, and long-term demographic shifts are all limiting labor force growth. As a result, economists expect labor supply to remain tight for years to come. 

In North Carolina, the challenge can be particularly pronounced for manufacturers located in smaller communities, where talent pools may be more limited than in major metropolitan areas. 

These workforce pressures are accelerating interest in automation, workforce training, and technologies that help manufacturers broaden the pool of potential talent. 

4. Inflation progress has slowed.

Inflation has fallen significantly since its peak following the pandemic, but it remains slightly above the Federal Reserve’s long-term target. 

Recent data indicates inflation may be stabilizing around 3 percent, meaning Fed officials still have work to do before reaching their 2 percent goal. 

That means manufacturers should continue to plan for an environment where costs may remain elevated and inflation risks have not fully disappeared. 

5. Global risks and trade uncertainty remain factors.

Manufacturers are also closely watching developments in global trade policy and geopolitical tensions. 

Uncertainty surrounding tariffs and international supply chains can slow business decision-making, particularly when companies are evaluating large investments. While these risks are difficult to predict, Martin noted that businesses tend to delay major decisions during periods of uncertainty. 

For manufacturers, uncertainty can complicate planning well beyond trade alone — affecting sourcing, expansion timelines, and broader investment decisions. 

North Carolina Continues to Outperform 

Despite these challenges, North Carolina remains one of the fastest-growing economies in the country. 

Employment growth across the state has significantly outpaced national averages since the pandemic, supported by strong business investment and continued population growth. Metropolitan areas — including Raleigh and Charlotte — continue to lead the region in job creation and economic expansion. 

Maintaining that momentum will require continued focus on the fundamentals that support growth in North Carolina: a competitive business climate, strong infrastructure, and a workforce that can meet industry demand. These are the same priorities the NC Chamber works every day to advance on behalf of North Carolina’s employers. 

Looking Ahead 

As manufacturers evaluate the year ahead, Martin emphasized that the broader economic outlook remains positive, but not without challenges. Global events, inflation trends, and workforce constraints will continue to shape the operating environment for businesses across the state. 

Through the Manufacturing Council, the NC Chamber continues to bring manufacturers timely insights on the economic and policy trends shaping business decisions and elevate the issues that matter most to the industry’s long-term competitiveness.