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.
CEOs Cut 2026 Outlook in September Poll as Economic Uncertainty Persists
CEOs are toning down their optimism for the coming months, amid continued worries about tariffs, trade, the Fed, the overall economy. “Too hard for people to create strategies when the ground moves every 30-60 days.”
- 65% anticipate revenue to grow in the year ahead, but 57% say they expect to end the year below their 2025 target.
- 53% expect profits to increase in the next 12 months, but 54% expect to end the year below target.
- Only 38% plan to increase those investments in the next 12 months (down from the average of 46% in 2024)
While the PMI increased to 49.1 (+.4), it signaled that economic activity in the manufacturing sector contracted in September for the 7th consecutive month, following a two-month expansion preceded by 26 straight months of contraction.
- New Orders Contracting
- Production Growing
- Employment Contracting
- Supplier Deliveries Slowing
- Raw Materials Inventories Contracting
- Customers’ Inventories Too Low Prices Increasing
- Exports and Imports Contracting
CEO – September
In September, U.S. manufacturing CEOs rated current conditions at 4.5/10, which is their weakest reading since the pandemic. In general, manufacturing is under pressure; overall CEO sentiment is cautious, but not uniformly negative, and there may be glimmers of stabilization. Accordingly, our recommendations for Sis are:
- “Selective optimism in rough terrain.” SIs who lean into efficiency, risk mitigation, and flexible offerings are best placed to capture recovery momentum.
- “Bridge projects now, scale later.” Use smaller or modular engagements now (e.g. island automation, pilot systems) to maintain activity, keep teams busy, and build storylines for larger rollouts when confidence rebounds.
- “Cost certainty and resilience > fanciful visions.” Use messaging on how to protect ROI from cost inflation, supply chain shocks, and schedule slippage.
- “Talent & remote enablement matter more today than ever.” With tight labor markets and travel constraints, highlight delivery models that de-risk onsite staffing or leverage digital commissioning, remote service, and augmented reality tools.
PMI – September
Given that SIs often straddle the line between upstream industrial capital investment and mid/late-stage operations, the implications are clear: there’s no broad “go” signal yet, but conditions may stabilize — if not strengthen — in the near future. Rather than betting on large new investments, the smart play is to lean into value-preserving and efficiency-oriented projects (think system retrofits, energy optimization, predictive maintenance). Meanwhile, service, support, and recurring revenue lines may offer ballast against cyclical dips.
That said, margin pressure persists: clients are sensitive to cost escalation, and supply chain volatility will continue to challenge quoting and execution. To thrive in this environment, SIs should bake in flexibility (escalation clauses, modular architectures), lean heavily on backlog and pipeline management, and stay ready to pounce when pockets of demand materialize.
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.
The Capital Goods New Orders ticked down slightly in July but we are still staying in a growth area for both the 3/12 and the 12/12. Capital spending is happening but there is still a lot of hesitation.
CSIA Stats – Revenue Trends
(September stats pending)
Our Key Takeaways
Observations:
- Revenue – In August, both Larger and Mid-size integrators fell sharply, now trailing revenue reported in August of 2024. Smaller integrators revenue grew slightly in August, but was still below August 2024.
- Capacity – Fell significantly to only 18% indicating full capacity
- Outlook – Despite falling revenue and capacity, Outlook, increased slightly to 73%
(September comments coming soon)
The generally downward trend in revenue in July and August, particularly as reported by larger integrators, reflect a Summer slow down in our SI community. Tariff uncertainty and complexity continue to make it difficult for manufacturers to move forward on larger projects.
While capacity utilization has increased to 33%, a significant portion remains idle, pending additional projects from manufacturing clients. Additionally, although there are early signs of renewed optimism, overall sentiment remains notably below the level observed at this time last year.