The U.S. machinery market is entering a new investment cycle as new orders are once again growing faster than shipments. This is extending lead times and growing backlog, a pattern that has historically preceded periods of stronger machinery production and capital investment.
After a relatively flat period during 2023 and 2024, inflation-adjusted machinery orders accelerated significantly throughout 2025 and into 2026. Orders increased from approximately $37.1 billion in January 2025 to $45.3 billion in March 2026, an annual growth of more than 13%.
Over the same period, shipments increased from $37.1 billion to $41.5 billion, growing at a slower pace. As a result, the gap between orders and shipments widened to nearly $3.9 billion in March 2026, the largest signal of backlogs building up again seen since the post-pandemic recovery.
FRED
The recovery is not being driven evenly across machinery sectors. Semiconductor machinery has emerged as the primary growth engine, supported by CHIPS Act investment, AI-related capacity expansion and new fabrication plant construction.
Construction machinery is also showing clear signs of a new cycle, with orders consistently exceeding shipments throughout most of 2025 and early 2026. Material handling equipment remains weaker than the broader machinery market, but orders have begun to stabilize after the sharp post-e-commerce correction, providing additional support to overall machinery demand.
When customers place orders faster than manufacturers can ship equipment, unfilled orders begin to accumulate. These growing backlogs give manufacturers a clearer view of future demand because they already have a larger pipeline of committed orders waiting to be fulfilled.
Historically, these periods have been followed by increases in factory utilization, hiring, capital expenditure and machinery output. The current cycle appears to be driven primarily by semiconductor manufacturing investment, with construction machinery providing a secondary source of growth.
While warehouse automation and material handling markets have not yet returned to their 2021-2022 highs, the broader machinery sector once again has the characteristics of an industry moving from normalization into expansion.
Which states will see the next wave of production growth?
The next machinery investment cycle will not be evenly distributed across the U.S. While Texas remains the largest machinery-producing state, Michigan has emerged as one of the strongest growth stories, and Ohio and Wisconsin continue to demonstrate the resilience of the Midwest manufacturing base.
Machinery production in Texas is forecast to grow from $25.9 billion in 2025 to $32.4 billion in 2028, although its performance remains closely tied to energy and commodity cycles. Meanwhile, Michigan has more than doubled its machinery production since 2007, while Ohio and Wisconsin have delivered steady long-term growth. Rising semiconductor equipment investment in Michigan, Texas, Massachusetts and Oregon is further supporting momentum.
These trends are being driven by multiple investment cycles. Texas is benefiting from energy, infrastructure and semiconductor projects led by companies such as Applied Materials, Lam Research and Samsung.
Michigan continues to gain from automotive investment, automation and reshoring, while Ohio is supported by Intel’s fab expansion and Wisconsin remains a key hub for material handling equipment. Combined with growing demand for construction equipment from OEMs such as Caterpillar, John Deere and Komatsu, these investments are helping rebuild machinery backlogs and supporting a new production cycle.
So what? How can you turn this data into action?
Over the past year, Interact Analysis has built a new state-level forecasting platform covering every major machinery sector and manufacturing end market across the U.S. This newly launched forecast helps companies move beyond national averages to understand exactly where machinery demand is emerging, which industries are driving growth and which states offer the greatest opportunities.
FRED
