US industrial output rises 0.7% in September as utilities strengthen and quarterly manufacturing growth slows

US industrial production accelerated in September, but the monthly rebound did not change the picture of slower manufacturing growth over the third quarter. The Federal Reserve reported on October 16 that seasonally adjusted industrial output rose 0.7% in September, after a revised 0.1% increase in August, and was 2.2% above its level a year earlier. Manufacturing rose 0.3%, mining increased 0.2%, and electric and gas utilities grew 3.5%. The total production index stood at 104.0, with the 2017 average set to 100.¹

Over the longer comparison period, total industrial output grew at a 2.8% annual rate in the third quarter, down from 4.8% in the second. Manufacturing's corresponding growth rate slowed from 5.6% to 0.7%. September can therefore have grown faster than August even while the third quarter grew more slowly than the second. An annualized quarterly rate converts the change from the previous quarter into an annual pace. It should be compared separately from monthly changes: it describes the pace of growth rather than the actual outcome of the coming year.²

Archive photo: a worker installs an F-150 seat at Ford’s Kansas City Assembly Plant in Claycomo, Missouri, on October 8, 2008. Photo: Ford Motor Co, “Kansas City Assembly” / Wikimedia Commons; CC BY 2.0.

A stronger total conceals substantial differences between industries

Utilities output rose 3.5% in September, with increases in both electricity and natural gas. For the third quarter as a whole, the sector expanded at a 14.8% annual rate. Mining increased 0.2% in the month and at a 5.0% annual rate in the quarter. Manufacturing returned to monthly growth, but its increase was markedly smaller than that of utilities.¹

These growth rates need to be read alongside industry weights. Industrial production uses value-added-based weights, so utilities' contribution depends on both its weight and the change in its output. The index measures real production; household electricity bills and business natural gas prices are separate price indicators.³

Within manufacturing, durable goods output increased just 0.1% in September. Primary metals, machinery, and electrical equipment, appliances and components rose 1.6%, 1.4% and 1.3%, respectively, while motor vehicles and parts fell 3.0%. Nondurable manufacturing rose 0.4%, including a 1.9% increase in printing and support activities and a 1.0% rise in chemicals. These divergent movements show why a recovering aggregate is no substitute for examining individual supply chains.²

Archive photo: Cardinal Power Station viewed from Ohio State Route 7 on August 18, 2024. Photo: Mr. Matté, “Cardinal Power Station from Ohio SR 7, Aug. 2024” / Wikimedia Commons; CC BY-SA 4.0.

Semiconductor strength does not mean all equipment is expanding together

Durable manufacturing grew at a 3.8% annual rate in the third quarter. Semiconductors and related electronic components expanded at a 28.4% annual rate, one of the drivers identified by the Federal Reserve. Nondurable manufacturing, by contrast, fell at a 1.6% annual rate. Semiconductor and related component output increased 2.1% in September and 19.9% from a year earlier, but production of computers and peripheral equipment fell 0.8% in the same month.¹⁴

The semiconductor figures support the conclusion that production in that industry is growing rapidly. They do not establish that demand for all technology hardware is accelerating, or that artificial intelligence is the cause. The report does not break down chip orders by end use or identify how much growth came from data centers, consumer electronics or other customers.

Viewed by product use, business equipment production was unchanged in September and grew at a 6.6% annual rate in the third quarter, down from 14.6% in the second. Within that category, transit equipment fell 1.7% in the month, information processing equipment declined 0.9%, and industrial and other equipment rose 1.3%. Industry classifications identify the producing sector, while market classifications identify product uses. These overlapping perspectives complement one another.²

Consumer goods also diverged. Overall production rose 0.7% in September, with nondurables up 1.2% and durables down 1.5%; total consumer goods output was still 0.1% below its year-earlier level. Construction supplies rose 1.0% in the month, while materials increased 0.7%. These are production indicators, not growth rates for retail sales, actual consumer expenditure or construction activity.²

Higher utilization does not mean industry is running at full capacity

Total industrial capacity utilization rose to 76.9% in September, 2.5 percentage points below its 1972–2025 average. Manufacturing utilization increased 0.1 percentage point to 75.9%, which was 2.3 points below its own long-run average. Mining reached 87.5%, or 2.3 points above its historical average. Utilities utilization rose 2.3 percentage points to 73.8% and remained substantially below its own average.¹

The denominator in utilization is not the accounting value of business assets. It is the Federal Reserve's estimate of sustainable maximum output: production that existing equipment can maintain under a realistic work schedule, allowing for normal downtime and sufficient inputs. Utilization is the seasonally adjusted production index divided by the corresponding capacity index, so both output and capacity changes affect the result.³

The long-run average provides a historical reference. An individual business’s ability to supply more still depends on its equipment, staff and intermediate inputs, and on whether those resources are available in time. Mining operating above its own average while manufacturing remains below its average already illustrates potentially different production constraints within the broad category of US industry.

Real output estimates are still subject to revision

The G.17 release covers manufacturing, mining, and electric and gas utilities; it is not a growth report for the entire economy. Its broad manufacturing definition includes not only industries classified as manufacturing under the North American Industry Classification System, but also historically included logging and newspaper, periodical, book and directory publishing, excluding exclusively online publishing. The manufacturing figures used here consistently follow that broad definition and should not be mixed with the narrower manufacturing row in the tables.¹

Nor are all monthly production figures compiled from factories reporting physical quantities. The Federal Reserve uses product data, such as tons of steel and barrels of oil, wherever appropriate. Where suitable physical indicators are unavailable, it estimates output from inputs such as production-worker hours. Value-added weights give changes in industries of different sizes different effects on the total.³

September's figures are preliminary. According to the methodology, the first estimate is revised in each of the following five months as additional data arrive. Published growth rates are calculated from unrounded indexes, so a different result calculated from indexes displayed to one decimal place is not in itself an error. This release revised August's total output change from no growth to a 0.1% increase, and manufacturing from a 0.3% decline to a 0.2% decline.¹³

The report also quantifies revision uncertainty. In Table 15, the 15th- and 85th-percentile reference estimates for September's monthly total output change are 0.28% and 0.98%; for manufacturing, they are −0.08% and 0.55%. These estimates use historical revisions since 2008, excluding April through November 2025, to indicate the possible range after the fifth monthly revision. They are neither forecasts of future months' production nor guaranteed upper and lower bounds. The manufacturing range crosses zero, a particular reason to avoid treating a modest preliminary increase as an unchangeable conclusion.³

Businesses need to know whether orders keep pace

In operating terms, if higher production corresponds to sustained new orders, existing plants can use equipment more intensively, and additional revenue covers extra labor, energy and material costs, increased output may help spread fixed costs. If the additional products mainly accumulate in inventory, or input costs rise faster, profits may not improve. G.17 does not provide company inventories, sales contracts or margins, so greater production cannot be equated with greater earnings.

Similarly, the 3.0% monthly fall in motor vehicles and parts is more directly relevant to that supply chain than the 0.7% increase in total national output. Its specific effects still depend on customers, products and inventory structures. Semiconductor suppliers face a stronger production signal, but still need to verify the persistence of orders, the product mix and actual deliveries. For utilities, assessing revenue and costs also requires electricity and gas selling prices and the composition of customer demand. This production report does not attribute those changes to specific causes.

The next test is not only whether output rises again in October. It is also whether manufacturing gains extend across more industries, business equipment returns to monthly growth and the decline in vehicles continues. The report schedules the next monthly release for November 17. Separately, the Federal Reserve plans an annual revision for November 24, changing the index base year to 2022, incorporating manufacturing benchmark data for 2023 and 2024, and updating monthly indicators, seasonal factors and capacity information. Methods for some series may also change.¹³

September's clearest signal is therefore a relatively strong monthly increase in industrial production alongside modest and uneven quarterly manufacturing expansion. Subsequent months, business orders and revised data will need to establish whether it develops into a more durable production recovery.

Source notes

1. October 16, 2026 · Industrial Production and Capacity Utilization — G.17, including the summary and annual revision notice · Board of Governors of the Federal Reserve System. ↩ ↩² ↩³ ↩⁴ ↩⁵ ↩⁶ ↩⁷

2. October 16, 2026 · Table 1: Industrial Production: Market and Industry Group Summary · Board of Governors of the Federal Reserve System. ↩ ↩² ↩³ ↩⁴

3. October 16, 2026 · Industrial Production and Capacity Utilization — G.17, full report, including Table 15, explanatory notes and release schedule · Board of Governors of the Federal Reserve System. ↩ ↩² ↩³ ↩⁴ ↩⁵ ↩⁶

4. October 16, 2026 · Table 2: Industrial Production: Special Aggregates and Selected Detail · Board of Governors of the Federal Reserve System. ↩