BMO Business Outlook: Midwest Companies Put AI, Automation and Capital to Work

Executive Summary

• BMO released its Midwest Business Outlook, highlighting a shift from cautious planning to deliberate execution driven by AI, automation, and disciplined capital allocation.
• Companies across Illinois, Wisconsin, Minnesota, and Indiana are prioritizing modernization—upgrading equipment, streamlining processes, and deploying technology—to offset tight labor markets rather than pursuing broad expansion.
• The outlook notes solid macro‑economic supports for 2026, selective M&A activity (especially bolt‑on deals), and regional GDP growth ranging from 1.2% to 3.0% YoY in Q3 2025.

Key Details

• Strategic Focus: Midwest firms are moving from pilot projects to measurable AI/automation deployments that improve throughput, efficiency, and capacity utilization.
• Capital Discipline: Investment decisions are ROI‑driven; projects lacking high returns are being deferred.
• Labor Constraints: Tight labor supply remains a structural challenge, prompting “do more with less” automation initiatives.
• Regional Economic Highlights:
• Illinois: Real GDP +2.0% YoY (Q3 2025); growth driven by information and finance/insurance sectors; data‑center expansion supporting infrastructure demand.
• Wisconsin: Real GDP +1.5% YoY (Q3 2025); unemployment at 3.1%; firms using automation and bolt‑on M&A to build scale.
• Minnesota: Real GDP +1.2% YoY (Q3 2025); capital spending rebounding after inflationary deferrals; focus on cost control, liquidity, and AI‑enabled productivity tools.
• Indiana: Real GDP +3.0% YoY (Q3 2025); manufacturing up 7.6% YoY; firms pairing productivity‑focused expansion with selective M&A.
• M&A Activity: Selective bolt‑on acquisitions are increasing, while broader sponsor‑backed deals remain cautious.
• Macro Outlook: Positive supports include AI‑driven investment and easing loan demand from rate cuts; risks persist around trade policy, inflation dynamics, and geopolitics.

Notable Quotes

• “Across the Midwest, companies are shifting decisively from planning to execution,” said Tony Sciarrino, Head, BMO Commercial Bank, U.S.
• “Growth is being supported by manufacturing activity and AI‑related investment, while tighter labor supply and lingering trade uncertainty continue to shape decision‑making,” said Scott Anderson, Chief U.S. Economist, BMO.