Minnesota Manufacturing Index – February 2026 Shows Improving Start to the Year

Key Takeaways

• Manufacturing activity is improving, with stronger new orders and production signaling a constructive start to 2026.
• Operating conditions remain balanced, with manageable inflation and capacity levels supporting continued output growth.
• Employment and trade trends remain key watch areas as Minnesota continues to run a manufactured-goods trade deficit.

Manufacturing Activity Begins 2026 with Measured Optimism

New Orders and Production Lead Growth

The February Business Conditions Index indicates overall expansion, supported by a notable improvement in new rrders and production. These gains suggest strengthening demand and improving output momentum as manufacturers move further into 2026.

Employment Remains a Key Variable

Employment continues to be an important factor to watch as activity strengthens. Workforce availability and hiring trends will likely play a critical role in sustaining continued expansion across the sector.

National Confidence and Inflation Trends Support Stability

OECD Business Confidence Returns to Baseline

At the national level, OECD Business Confidence returned to approximately its long-term baseline near 100 in February 2026. This aligns with broader signs of stabilization and a more predictable operating environment for manufacturers.

Manufacturing Input Costs Remain Manageable

Inflation at the factory gate remains contained but positive. Total manufacturing Producer Price Index (PPI) increased modestly in January 2026, underscoring persistent, but manageable, input and pricing pressures across the industry.

Capacity and Production Indicators Show Balanced Conditions

Operating conditions appear more balanced rather than stretched, with Capacity Utilization (Cap-U) sitting around 75.6% in January 2026. Industrial Production Index (IPI) levels have risen to their strongest point since late 2022, supporting continued output gains without signaling immediate capacity constraints.

Want to stay ahead in Minnesota manufacturing?

Connect with our Manufacturing Industry Team at Boyum Barenscheer for insights, strategy guidance, and practical support to help your business navigate trends, manage costs, and optimize production. Catch up on prior reports that include introductions to economic indicators and updates from January 2026.

Access the February Minnesota Manufacturing Index.