U.S. Manufacturing Production Flat in September

  • Factory production in the United States (U.S.) was unchanged in September as manufacturing remained constrained by tariffs on imports. The flat reading in manufacturing output reported by the Federal Reserve on Wednesday, December 3, 2025, followed an unrevised 0.1% gain in August.
  • Production at factories increased 1.5% on a year-over-year basis in September, while manufacturing output grew at a 1.3% annualised rate in the third quarter, slowing from the April-June quarter's 2.4% pace. Manufacturing has been hamstrung by President Donald Trump's sweeping tariffs, but a surge in spending on artificial intelligence has propped up other industries.
  • Trump has defended the duties as necessary to revive a long-declining U.S. industrial base, though economists argue that the effort cannot be accomplished in a short period of time, citing high production and labour costs as among the challenges. A survey from the Institute for Supply Management on Monday showed its manufacturing Purchasing Managers’ Index (PMI)1 contracted for a ninth straight month in November, with tariffs continuing to be cited as a constraint across industries.
  • Furthermore, motor vehicle and parts production decreased 2.2% in September after rebounding 3.0% in August. Nondurable manufacturing production dipped 0.1% while mining output was unchanged after rising 0.4% in August. Durable manufacturing output edged up only modestly by 0.1%.
  • Utilities production rebounded 1.1%, following a 3.0% decline in August. Overall industrial production ticked up 0.1% after falling 0.3% in August. Industrial output rose 1.6% on a year-over-year basis and grew at a 1.1% rate in the third quarter.
  • Overall, capacity utilisation for the industrial sector, a measure of how fully firms are using their resources, was unchanged at 75.9% in September. However, the metric was 3.6 percentage points (pps) below its 1972–2024 average. Further, the operating rate for the manufacturing sector slipped to 75.5% from 75.6% in August and was 2.7pps below its long-run average.

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 1This is an economic metric that indicates whether the manufacturing industry is experiencing an expansion, a contraction, or a standstill.

(Source: Reuters)