Economic Insights
This collection of the latest updates and data from the systems integration industry explores leading indicators including the CEO Confidence Index, Purchasing Managers Index, and CSIA updates. We offer our own insights based on the information referenced and interactions with Exotek clients and the SI community.
CEO Optimism Nears 2025 High
Halfway through the year, CEOs grow more optimistic that trade uncertainty will soon resolve, bringing more clarity for business. “The economy will get past the tariff issues.”
- 66% anticipate revenue to grow, vs. 67% in June and 84% in January
- 55% expect profits to increase vs. 54% in June, 76% in January
- 33% plan to increase capex vs. 36% in June, 56% in January
Manufacturing PMI® at 48% (-1.0%), contracting in July for the fifth consecutive month, following a two-month expansion preceded by 26 straight months of contraction
- New Orders and Backlogs Contracting
- Production Growing (51.4) and Employment Contracting
- Supplier Deliveries Faster
- Raw Materials Inventories Contracting
- Customers’ Inventories Too Low
- Prices Increasing
- Exports and Imports Contracting
CEO – July
With President Trump’s trade deadline approaching and “Big Beautiful Bill” clearing Congress, CEO sentiment suggests a shift in tone—from uncertainty toward cautious optimism. Here’s what systems integrators should consider:
- CEOs are growing more hopeful about economic clarity, especially around trade/tariffs—meaning less risk-based conservatism could open new project conversations.
- Still, capex and hiring remain muted, so demand for automation may be slow to fully recover unless tied to clear ROI or efficiency gains.
- Integrators should lean into value-driven automation and digital services, positioning solutions that reduce costs, boost productivity, or support strategic transformation.
- This sentiment inflection provides timely leverage for proposals tied to infrastructure, software modernization, or service-based models.
CEO confidence is showing the most optimism of the year. Although planned investment and staffing remain conservative, this recurring shift toward positive sentiment could encourage clients to revisit automation and digital transformation opportunities. Integrators that emphasize clear ROI, flexibility, and efficiency will likely resonate best.
PMI – July
Despite CEO optimism returning, the Purchasing Managers tell a more somber story.
- Demand is soft: New orders are contracting, suggesting fewer green lighted automation projects in Q3.
- Production isn’t collapsing: Some activity continues, so resilience exists—especially in sectors with stable output.
- Opportunity in leveraging low inventories: With customer inventory levels low, clients may be more open to supply-based automation contracts or inventory-monitoring services.
Integrators should optimize services and software-driven engagements that deliver efficiency gains, predictable output, or circular revenue. In the face of weak new orders, emphasize consultative automation (FELs) and lifecycle support over heavy upfront capital projects.
Exotek Insights – CSIA vs UNXANO Analysis
We have transitioned from tracking US Capital Goods New Orders (USCGNO) to Non-Defense Capital Goods Excluding Aircraft (UNXANO). This shift better aligns with the focus of most system integrators and provides a clearer indication of actual capital spending.
Exotek Insights – UNXANO ROC Analysis
Exotek Insights – CSIA ROC Analysis
Our Key Takeaways
ROC Analysis
The UNXANO has remained stagnant since spring 2023 after it began slowing in June 2021. On a positive note, spending remains at a high level. There is evidence of an uptick in capital spending with the 3/12 tipping up well into growth area.
System integrators faced a significant slowdown last year, even entering the contraction zone. The second half showed promise with the 3/12 crossing above the 12/12, but the year ended with the 3/12 crossing back down over the 12/12 significantly. The first quarter of this year started the year on a positive note with growth being signaled going forward. But, with all the uncertainty in the market most integrators are very concerned about Q3 and Q4. The revenue in the first four months was primarily driven by eating through backlog. The ROC analysis for CSIA members is encouraging with significant growth in the 3/12 chart. Let’s hope it sticks.
Observations:
- Outlook –59% positive, better than the less than 40% for prior 3 months
- Capacity – only 24% positive, meaning low utilization (lowest since Feb last year)
- Revenue – Revenue continues to climb but the future is uncertain
Our Key Takeaways
Community sentiment remains low, with most members expressing a negative outlook for the fourth consecutive month—an unprecedented stretch of pessimism. Once again, we’re facing overcapacity, echoing the conditions that led to layoffs in late 2024.
With manufacturing clients hesitant to greenlight larger projects, system integrators should prioritize securing smaller engagements where possible. This shift reflects end users’ current focus on cost reduction and operational efficiency as they await clarity on tariff-related uncertainties. While large-scale investments remain paused, these smaller projects are proving essential in bridging the gap.
Industry Analysts/Pundits
Information in the below section is courtesy of Alex Chausovsky, Director of Analytics & Consulting at Bundy Group — a boutique investment bank specializing in business sales, capital raises, and strategic advisory services.
Industrial M&A and Tariff-Driven Shifts
Bloomberg’s Industrial Strengths
Brooke Sutherland, Boston Bureau Chief
Bundy Group – Macro Economic and Trump Policies
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Bundy Group – Labor Market and Strategic Considerations
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Bundy Group – Our Key Takeaways
At the 2025 CSIA Conference, keynote speaker Alex Chausovsky, Director of Analytics and Consulting at Bundy Group, delivered a presentation titled “Driving Business Value Through Insights into Today’s Economy.”
Alex outlined the evolving global economic landscape, describing a shift toward a multi-polar world divided between largely free-market economies and autocratic regimes. He noted the growing influence of emerging economies like Brazil, Australia, and Turkey, as well as the rising power of multinational corporations.
Despite widespread concerns, Alex highlighted that the U.S. share of the global economy is rebounding—now at 26%—while Europe and Japan are declining, contributing to China’s relative rise. The U.S. dollar remains dominant, accounting for 88.4% of global trade transactions. Although the national debt is a concern, he pointed out that 80% of it is domestically held, with China holding just 2%.
On U.S. trade policy, Alex criticized tariffs on allies like Canada and Mexico but supported strategic tariffs on China, viewing them as a way to leverage U.S. economic strength. He suggested that if trade negotiations are resolved in the coming months, a recession is not inevitable.
However, he expressed concern about the labor market—not due to illegal immigration, but because of a looming shortage of skilled professionals. This is driven by an aging population and a mismatch between graduates’ qualifications and the needs of the professional workforce.
He concluded with strategic recommendations and actionable insights tailored for the systems integrator (SI) community.
Bloomberg – Our Key Takeaways
In reviewing Bloomberg’s Industrial Strengths by Brooke Sutherland, while tariff uncertainty and slowing capital spending continue to weigh on the industrial sector, M&A activity is running at its fastest pace since 2021—over $200B in US deals announced so far this year. Drivers include expansion into high-growth markets like data center infrastructure, diversification into new sectors, and consolidation of competitors.
At the same time, new and shifting tariffs are causing customers to delay long-term engineered system projects. Leading automation providers (Rockwell, Siemens, Emerson) are reporting project pushouts, even as some near-term sales are inflated by customers pre-buying equipment ahead of tariff deadlines.
For system integrators, our observations are that these trends point to:
- Post-M&A opportunities – acquisitions may realign supply chains and create openings for new partnerships and project work.
- Tariff-resilient solutions – modular, cost-flexible designs that reduce exposure to volatile import costs.
- Resilient sectors for growth – data centers, reshoring-related upgrades, and automation projects aimed at improving operational efficiency remain active investment areas.
You can explore the full commentary and subscribe to her newsletter on Bloomberg’s Industrial Strength page.