American Factory Output Falls 0.3 Percent in August and Ends a Seven Month Run of Gains
Manufacturing output in the United States fell 0.3 percent in August, its first monthly decline after rising for 7 consecutive months, figures published by the Federal Reserve on 18 September show. Total industrial production, which also takes in mining and utilities, was unchanged on the month after a rise of 0.2 percent in July. Economists surveyed by a financial news organisation had expected factory output to rise 0.3 percent, a forecast that does not come from the release itself.
| Measure | August | July |
|---|---|---|
| Manufacturing | -0.3% | +0.2% |
| Total industrial production | 0.0% | +0.2% |
| Mining | +0.1% | +0.1% |
| Utilities | +1.8% | +0.5% |
Monthly percent change, seasonally adjusted. July figures as revised in this release.
The weakness sits in durable goods
The decline inside manufacturing was concentrated rather than general. Durable manufacturing fell 0.5 percent with declines described as broad based across categories, while nondurable manufacturing was unchanged and the small other manufacturing group, publishing and logging, rose 1.0 percent. Motor vehicles and parts, one of the most cyclical lines in the index, fell 1.2 percent.
Across the market groups the month was mixed. Consumer goods edged up 0.1 percent, as a gain in nondurables offset a fall in durables. Business equipment fell 0.5 percent and defence and space equipment fell 1.2 percent. Construction supplies fell 0.7 percent while business supplies ticked up 0.1 percent. Materials rose 0.2 percent, carried by a 0.7 percent increase in energy materials. Utilities did the work that kept the total flat, rising 1.8 percent as higher electricity output more than offset a fall at natural gas utilities.
Capacity tells a narrower story than the headline
| Operating rate | August | Long run average |
|---|---|---|
| Total industry | 76.3% | 79.4% |
| Manufacturing | 75.7% | 78.2% |
| Mining | 86.3% | 85.2% |
| Utilities | 71.3% | 84.0% |
Capacity utilisation, percent. Long run average covers 1972 to 2025.
Capacity utilisation for manufacturing fell 0.3 percentage point to 75.7 percent, which leaves it 2.5 points below its long run average. For total industry the rate was unchanged at 76.3 percent, 3.1 points below its own long run average. The operating rate for mining rose 0.1 percentage point to 86.3 percent and that for utilities rose 1.1 points to 71.3 percent, though utilities remain the one major group running far under their historical norm.
On the year the picture is still one of expansion. Total industrial production stood at 103.1 percent of its 2017 average in August, 1.4 percent above the same month of 2025. Manufacturing was 0.9 percent higher on the year and mining 0.3 percent, while utilities were 6.2 percent higher, which on our calculation makes utilities the largest single sector contribution to the annual gain in the total index, ahead of manufacturing despite manufacturing’s far greater weight.
What was revised
July was not touched. Both the July index level and the July monthly rate for the total index and for manufacturing are carried over unchanged, as are the July operating rates. The revisions land earlier in the year: for the total index March was cut to a fall of 0.2 percent, May was lifted to a gain of 0.1 percent and June trimmed to 0.2 percent, and for manufacturing May was lifted to 0.1 percent and June cut to 0.1 percent. The August figures themselves are preliminary.
Why it matters: The central bank raised its policy rate by a quarter point on 16 September, and this is the first industrial production read since that decision. On our reading it complicates rather than settles the argument. A single 0.3 percent fall after 7 months of gains is not a downturn, annual growth in the index is still positive, and the total held flat. But the weakness is in exactly the places that respond to the cost of money and the cost of inputs, durable goods and business equipment, while the strength is in utilities, which respond to weather and electricity demand. Strip the utilities out and August was a soft month for American industry.
Outlook: The next monthly release covers September. The annual revision to the whole series is set for 24 November, and the rebased indexes will use 2022 as the base year in place of 2017, which will change the level of every index in the release though not the story they tell.
Sources: Federal Reserve.
