In a surprising turn of events, the manufacturing output in the United States saw a monthly increase of 0.2% in August, primarily driven by the rebound in automotive and some non-durable goods production. Economists had previously anticipated a 0.2% decline, highlighting a 0.9% growth compared to the same period last year.
According to statistics released by the Federal Reserve on Tuesday, following a 0.4% decrease in July, the industrial production index (IP) saw a slight uptick of 0.1% in August. Manufacturing output also rose by 0.2% in August after a minor decline of 0.1% in July. Within the manufacturing sector, automotive and parts production increased by 2.6%, while output from other factories saw a marginal uptick of 0.1%.
Earlier predictions by economists had forecast a 0.2% decrease in manufacturing output for August, which accounts for 10.2% of the total U.S. economy and around three-quarters of overall industrial production.
Detailed data shows that output growth was observed in sectors such as automobiles, steel, pharmaceuticals, and textiles—areas that the Trump administration has expressed particular interest in or intends to support through policies. Tariff measures implemented by the authorities, ranging from levying a 50% tariff on steel and aluminum to imposing a 25% tariff on automobiles and components, as well as plans to gradually increase drug tariffs from lower rates (possibly 15%) to high tariffs of 250% within the next year and a half, have boosted domestic production in the U.S.
Furthermore, the surge in spending on artificial intelligence (AI) has bolstered output in certain manufacturing sectors. While output for automotive and parts had declined by 0.7% in July, it rebounded by 2.6% in August, though production of metal products and machinery decreased. Durable goods manufacturing output increased by 0.2% in August following a 0.3% growth in July, whereas non-durable goods manufacturing output, which had decreased by 0.5% in July, rebounded by 0.3% in August.
There were increases in the production of textile, petroleum, and coal products, but decreases in the output of plastic and rubber products. Output for chemicals, food, beverages, and tobacco products all saw increases.
Mining output rebounded by 0.9% in August after a 1.5% decline in July. Utilities such as electricity production witnessed a 2.0% drop in August and 0.7% decline in July.
The industrial capacity utilization rate, an indicator of the extent to which business resources are being utilized, remained unchanged at 77.4% in August, 2.2% below the long-term average from 1972 to 2024. The manufacturing capacity utilization rate saw a slight increase of 0.1% to reach 76.8% in August, 1.4% lower than the long-term average.
Additionally, retail sales continued to see significant growth for the third consecutive month in August, indicating that consumer spending remains resilient and is to some extent supporting the U.S. economy.