U.S. manufacturers spent more on automation even as forecasts missed

First National Capital says U.S. middle-market manufacturers pushed capital investment higher in the first half of 2026, with machine tool order values up nearly 32% and first-quarter activity hitting a record. The report argues the main constraint is underwriting capability for integrated automation, not a lack of credit.

Why it matters: - U.S. manufacturers kept investing even without the rate cuts and policy clarity many had expected, signaling that capacity expansion and automation are still moving forward. - The report says the bigger bottleneck is financing complex automation packages, which can force manufacturers to scale back scope or delay projects. - Manufacturers that waited for lower rates or tariff decisions ended up facing higher borrowing costs, higher equipment prices and longer lead times.

What happened: - First National Capital Corporation released The Cost of Waiting, a mid-year report on U.S. middle-market manufacturing capital spending in the first half of 2026. - U.S. manufacturing technology orders totaled $2.77 billion through the first five months of 2026. - That was up 31.9% year over year. - The first quarter was the strongest on record. - The report says the findings came from data from the Institute for Supply Management, AMT – The Association For Manufacturing Technology, the Equipment Leasing and Finance Association and the Federal Reserve, plus First National Capital's own origination data and second-quarter research conversations with manufacturing executives. - The full report is available here.

The details: - The January 2026 Manufacturing CapEx Outlook assumed easier financing and more policy clarity by mid-year, but neither materialized. - The Federal Reserve held its benchmark rate across four consecutive meetings and raised its inflation projection. - The Section 232 investigation covering robotics and industrial machinery remained overdue past its statutory end-of-May deadline. - Order values grew much faster than unit counts, pointing to more automation content in each machine order. - The added content included robotic load and unload systems, pallet systems, integrated vision and the engineering work needed to make those elements operate as one production cell. - Contract machine shops, the largest buying segment historically, increased order values by more than 25% early in the year while unit counts rose only in the single digits. - The report says integration content has no independent resale value and falls outside the comparable-transaction and auction data conventional underwriting uses. - Generalist lenders often finance the core machinery and exclude the integration package. - That leaves manufacturers to fund the difference or reduce the automation scope. - In many cases, manufacturers cut the automation features that would have allowed a cell to run unattended.

Between the lines: - The report frames the issue as an underwriting gap, not a credit shortage. - Darren Higuchi, chief credit officer at First National Capital Corporation, said equipment finance recorded its strongest quarter on record and loss rates declined for a second consecutive month. - Higuchi said the market lacked lenders able to evaluate a $2.4 million integrated automation cell inside a three-week window. - The report suggests that faster, more specialized underwriting may matter more than balance-sheet capacity for middle-market manufacturers buying complex equipment. - The paper also treats waiting as a cost center: delay can turn a financing decision into a scheduling problem and a pricing problem at the same time.

What's next: - The Cost of Waiting is the manufacturing installment in First National Capital's four-part mid-year series. - Companion reports will cover oil and gas, private equity and business aviation. - Media can request a copy of the report from First National Capital. - First National Capital is headquartered in Irvine, California, and says it has funded more than $4.5 billion across North America. - The firm says its transaction capacity ranges from $500,000 to $250 million.