The Federal Reserve reported that U.S. factory output declined 0.3% in August, marking the first drop in manufacturing production for the year. The data, released on September 18, 2026, showed total industrial production remained unchanged as the decline in manufacturing was offset by gains in other sectors. Economists had forecast a 0.3% increase for the month, making the contraction an unexpected shift in the trend.
What it means
The decrease in factory output coincided with a drop in capacity utilization to 75.7%, the lowest level in five months. Specific sectors drove the decline, with business equipment output falling 0.5% and auto production dropping 1.2%. Defense and space equipment output also declined by 1.2%. Output for computer and electronic products, furniture, and primary metals decreased, while machinery, apparel, and textiles saw increases. Manufacturing output excluding motor vehicles fell 0.2%.
Utility production rose 1.8%, driven by higher electricity demand, which helped keep the overall industrial utilization rate unchanged. Mining output edged up slightly. Manufacturers reported facing higher input costs for oil and other materials. Supply-chain disruptions linked to conflicts in the Middle East and Ukraine were cited as contributing factors to the operational challenges.
Key facts
- U.S. factory output fell 0.3% in August.
- Total industrial production was unchanged.
- Economists had forecast a 0.3% advance.
- Business equipment output dropped 0.5%.
- Auto production fell 1.2%.
- Defense and space equipment output declined 1.2%.
- Utility production climbed 1.8%.
- Mining output edged up 0.1%.
- Factory capacity utilization fell to 75.7%.
- Manufacturing output excluding motor vehicles dropped 0.2%.
Source: Federal Reserve data release