Key points

  • Manufacturing output declined 0.3% in August, ending a seven-month run of increases.
  • Total industrial production was unchanged as utilities rose 1.8% and mining edged up 0.1%.
  • Total capacity utilization held at 76.3%, 3.1 percentage points below its 1972–2025 average.

U.S. manufacturing output fell 0.3% in August, ending seven consecutive months of increases, according to data released by the Federal Reserve on September 18. The broader industrial-production index was unchanged from July because gains in utilities and mining offset the factory decline. The report offers a fresh reading on the production side of the economy after the central bank raised interest rates this week.

Durable goods led the factory decline

The Fed said output at durable-goods manufacturers decreased 0.5%, with declines spread across categories. Nondurable manufacturing was unchanged, while the smaller publishing and logging component rose 1.0%. Reuters reported that motor vehicles and computer equipment were among the areas weighing on factory production. Manufacturing accounts for about three-quarters of the Fed's industrial-production index and roughly 9.4% of the U.S. economy.

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Utilities kept the headline index flat

Total industrial production held at 103.1% of its 2017 average and remained 1.4% above its August 2025 level. Utility output increased 1.8%, driven by electric utilities, while mining output edged up 0.1%. Those gains were enough to offset the manufacturing retreat. July's increase in total production was confirmed at 0.2%, and the August figure was marked preliminary.

Capacity remains below the long-run norm

Overall capacity utilization was unchanged at 76.3%. That rate was 3.1 percentage points below the 1972–2025 average, suggesting that industrial operators still had meaningful unused capacity. Manufacturing utilization declined 0.3 percentage point to 75.7%, while mining utilization rose to 86.3% and the utility rate increased to 71.3%. The gap matters because persistent spare capacity can limit the need for businesses to add equipment even when demand improves.

Business equipment and construction supplies weakened

The Fed's market-group data were mixed. Output of business equipment fell 0.5%, defense and space equipment declined 1.2%, and construction supplies dropped 0.7%. Consumer-goods production edged up 0.1%, while materials rose 0.2% as energy materials increased. The pattern points to a broad pause rather than a uniform contraction across every industrial category. Within consumer goods, stronger nondurable production offset weaker durables. Final products slipped 0.1%, nonindustrial supplies fell 0.2%, and materials provided the clearest positive contribution. Those splits show why the headline index can remain flat even when the factory component moves lower: industrial production also captures mining and utilities, whose monthly swings can mask changes on assembly lines.

Higher costs cloud the near-term outlook

Reuters said rising energy costs, elevated borrowing rates and geopolitical uncertainty were complicating the outlook for manufacturers, even as spending tied to artificial intelligence infrastructure and defense provided support. The Fed report itself measures output and capacity rather than business confidence, so it does not establish why production changed. It does show that the factory sector entered late summer with less momentum than in the preceding seven months.

What comes next

The August figures are an initial estimate and can be revised as additional source data arrive. The Federal Reserve plans an annual revision of the industrial-production and capacity-utilization indexes on November 24, incorporating newer Census Bureau benchmarks and changing the index base year to 2022. Until then, the key question is whether August was a temporary interruption or the start of a softer manufacturing trend as companies absorb higher financing and input costs for longer.

Sources

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