US manufacturing output rose 0.3% in September 2026 after falling a revised 0.2% in August, the Federal Reserve said on October 16. The rebound accompanied a broader increase in industrial production, though factory growth remained modest over the third quarter.
Key Takeaways
- Manufacturing recovered in September but grew at an annual rate of just 0.7% in the third quarter.
- Total industrial production rose 0.7% in September, with utilities recording the largest sector increase.
- Factory capacity utilization remained below its long-run average despite a small monthly improvement.
Table of Contents
- US manufacturing rebounds, but quarterly growth stays modest
- Stronger industrial output masks uneven demand
- Spare factory capacity remains ahead of annual revisions
- Conclusion
US manufacturing rebounds, but quarterly growth stays modest
The Federal Reserve’s September 2026 industrial production release showed manufacturing output 1.1% above its year-earlier level. August’s monthly decline was revised to 0.2% from the previously estimated 0.3%. September’s figures are preliminary.
The monthly recovery did not translate into rapid quarterly growth. Manufacturing output increased at a 0.7% annual rate in the third quarter, compared with 2.8% for the broader industrial sector, which also includes mining and utilities.
Performance within factories was uneven. Primary metals, machinery, and electrical equipment, appliances and components each posted monthly gains of at least 1%, while motor vehicles and parts output fell 3.0%.
| Item | Details |
|---|---|
| Durable manufacturing | Output increased 0.1% in September 2026. |
| Nondurable manufacturing | Output increased 0.4% in September 2026. |
| Mining | Output increased 0.2% in September 2026. |
| Utilities | Output increased 3.5% in September 2026. |
Stronger industrial output masks uneven demand
Total industrial production increased 0.7% in September after rising a revised 0.1% in August. The overall index stood 2.2% above September 2025, with utilities expanding much faster than manufacturing or mining during the month.
Consumer goods production rose 0.7%, as an increase in nondurable goods more than offset a decline in durable goods. Construction supplies gained 1.0%, while business equipment production was unchanged.
The flat business-equipment reading limits the case for describing September’s rebound as a broad acceleration in capital investment. Over the third quarter, durable manufacturing grew at a 3.8% annual rate, helped in part by a 28.4% annualized increase in semiconductors and related electronic components. Nondurable manufacturing fell at a 1.6% annual rate.
Spare factory capacity remains ahead of annual revisions
Manufacturing capacity utilization edged up 0.1 percentage point to 75.9% in September, still 2.3 percentage points below its 1972–2025 average. The measure indicates how much available production capacity factories are using; the gap shows that the rebound left operating rates below their historical norm.
Across all industry, capacity utilization rose to 76.9%, or 2.5 percentage points below its long-run average.
The Fed plans to publish its annual industrial production and capacity-utilization revisions on November 24, 2026. The update will change the indexes’ base year to 2022 and incorporate new manufacturing benchmark data for 2023 and 2024, alongside other data and revised seasonal factors.
Conclusion
September restored manufacturing growth after August’s decline, but quarterly gains and factory utilization remained subdued. The November 24 annual revision is the next confirmed update that could reshape the historical production picture.
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