The comeback of a rate-sensitive America
Key sectors of the economy that spent years squeezed by high interest rates are gaining momentum.Why it matters: For years, manufacturing and construction were among the clearest signs that the Federal Reserve's tightening campaign — reversed only somewhat at the end of last year — was weighing on the economy.Now, manufacturing and construction are early sources of job growth, helped by an AI investment boom that has so far been unconstrained by still-high borrowing costs.What they're saying: "The private labor market has rebounded in 2026 due to a resurgence of the highly cyclical manufacturing sector ... while a robust buildout of data centers has propelled construction employment," Troy Ludtka, senior economist at SMBC, wrote in a note Monday.Ludtka wrote that the AI infrastructure buildout should continue to underpin construction employment, while recent business surveys suggest manufacturing employment growth could keep revving up.The big picture: The manufacturing sector has expanded for seven straight months after contracting for much of the past two years, according to the Institute for Supply Management's monthly factory survey.The group said Monday that its employment gauge climbed into expansion territory for the first time in nearly three years.
Reported by 1 outlet — Axios. See all sources ↓
Key sectors of the economy that spent years squeezed by high interest rates are gaining momentum.Why it matters: For years, manufacturing and construction were among the clearest signs that the Federal Reserve's tightening campaign — reversed only somewhat at the end of last year — was weighing on the economy.Now, manufacturing and construction are early sources of job growth, helped by an AI investment boom that has so far been unconstrained by still-high borrowing costs.What they're saying: "The private labor market has rebounded in 2026 due to a resurgence of the highly cyclical manufacturing sector ... while a robust buildout of data centers has propelled construction employment," Troy Ludtka, senior economist at SMBC, wrote in a note Monday.Ludtka wrote that the AI infrastructure buildout should continue to underpin construction employment, while recent business surveys suggest manufacturing employment growth could keep revving up.The big picture: The manufacturing sector has expanded for seven straight months after contracting for much of the past two years, according to the Institute for Supply Management's monthly factory survey.The group said Monday that its employment gauge climbed into expansion territory for the first time in nearly three years. In other words, more surveyed manufacturers reported increasing employment rather than reducing it.The report also showed manufacturing output growing at the fastest rate since late 2021.The official jobs data is only starting to reflect manufacturing's health as suggested by the survey. Manufacturing payrolls have stabilized this year after a roughly 300,000 job decline between early 2023 and late 2025.Between the lines: One machinery manufacturer said the global AI infrastructure buildout has pushed demand for data center equipment into "full procurement and manufacturing ramp-up," with booming orders for semiconductors, networking and power equipment.
Read the full report at Axios ↗
Why it matters
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- What's the story?
- Key sectors of the economy that spent years squeezed by high interest rates are gaining momentum.Why it matters: For years, manufacturing and construction were among the clearest signs that the Federal Reserve's tightening campaign — reversed only somewhat at the end of last year — was weighing on the economy.Now, manufacturing and construction are early sources of job growth, helped by an AI investment boom that has so far been unconstrained by still-high borrowing costs.What they're saying: "The private labor market has rebounded in 2026 due to a resurgence of the highly cyclical manufacturing sector ... while a robust buildout of data centers has propelled construction employment," Troy Ludtka, senior economist at SMBC, wrote in a note Monday.Ludtka wrote that the AI infrastructure buildout should continue to underpin construction employment, while recent business surveys suggest manufacturing employment growth could keep revving up.The big picture: The manufacturing sector has expanded for seven straight months after contracting for much of the past two years, according to the Institute for Supply Management's monthly factory survey.The group said Monday that its employment gauge climbed into expansion territory for the first time in nearly three years.
- How widely is it covered?
- 1 outlet, average source rating 7.0/10.
- When was it last updated?
- 17m ago.
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The comeback of a rate-sensitive America
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