Wipfli Q1 Pulse Survey: Margin Pressure Isn’t Letting Up, Manufacturers See a 2026 Comeback

Manufacturers remain under intense cost pressure, but a notable surge in first-quarter optimism suggests 2026 may mark a turning point, according to the Q1 2026 Manufacturing Pulse Study from Wipfli, a national accounting and advisory firm.

The quarterly survey of over 300 industrial manufacturing leaders shows the higher cost of doing business remains the industry’s top concern — a position it has held for much of the past four years. Yet sentiment has jumped more sharply than in prior first quarters, and more than half of respondents expect revenue to increase year over year.

Cost pressure continues to squeeze margins

Manufacturers cite a familiar but persistent mix of challenges:

• Rising raw material tariffs
• Continued wage growth expectations
• Lingering inflationary effects
• Limited ability to pass price increases on to customers

While headline inflation has cooled, labor expectations have not. After years of catch-up wage adjustments, fixed costs remain elevated — even as customers continue to demand price reductions and efficiency gains.

“Manufacturers are still in a tight balancing act,” said Cara Walton, director of manufacturing market intelligence improvement at Wipfli. “Inflation may have eased somewhat, but labor, tariff and operational costs continue to climb. At the same time, customers are pushing for price downs. That tension keeps pressure firmly on margins.”

Many of the top concerns reported — tariffs, inflation, talent development and price pass-through limitations — directly reinforce the higher cost of doing business.

A stronger start to 2026

Despite ongoing strain, manufacturers entered 2026 with significantly stronger sentiment than they showed at the end of last year. While first quarters typically bring a modest lift in confidence, this year’s increase is more pronounced than in recent cycles.

Several sectors are contributing to that optimism. Marine-related manufacturing, infrastructure supply chains, commercial aerospace, and medical and dental manufacturing are performing at or above expectations.

Commercial activity is also improving. Respondents report increased quote activity compared to the same period last year — a sign that customers are exploring new opportunities, even if purchasing decisions remain selective.

The clearest indicator of renewed confidence: more than half of manufacturers surveyed expect revenue growth in 2026 compared to 2025.

“Uncertainty hasn’t disappeared,” Walton said. “But manufacturers are starting to see clearer pathways forward.”

What leaders should be evaluating now

With two months of 2026 already complete, Walton advises manufacturers to pressure-test their assumptions:

• Do you have full visibility into your supply chain and tariff exposure?
• How diversified is your customer base and revenue mix?
• Have you modeled scenarios for significant gains or losses in volume?
• Are your quoting processes, machine rates and open capacity aligned with current demand?

“Two months may not feel like much, but it’s already one-sixth of the year,” Walton said. “If you set a plan in January, now is the time to evaluate progress and course-correct where needed.”

About the study

Wipfli’s Q1 2026 Manufacturing Pulse Study reflects feedback from more than 300 manufacturing leaders across industrial subsectors nationwide. The firm conducts the survey quarterly to track cost pressures, revenue expectations, sector performance and operational trends.

Full results are available exclusively to survey participants to preserve the value of candid quarterly feedback. Findings will also be reviewed in a participant-only webinar later this quarter.

To learn more about Wipfli’s manufacturing insights and advisory services, visit wipfli.com/industries/manufacturing. Stay connected with Wipfli on LinkedIn for the latest reports, thought leadership, events, and firm news.