US manufacturing production flat in September

Trump’s tariffs hobble manufacturing, while AI spending helps prop up other industries

Manufacturing output grew at a 1.3% annualised rate in the third quarter, slowing from the April-to-June quarter’s 2.4% pace. PHOTO: REUTERS

Published Wed, Dec 3, 2025 · 11:23 PM

[WASHINGTON] US factory production was unchanged in September as manufacturing remained constrained by tariffs on imports.

The flat reading in manufacturing output reported by the Federal Reserve on Wednesday (Dec 5) followed an unrevised 0.1 per cent gain in August.

Economists polled by Reuters had forecast production for the sector, which accounts for 10.1 per cent of the economy, ticking up 0.1 per cent. Production at factories increased 1.5 per cent on a year-over-year basis in September.

Manufacturing output grew at a 1.3 per cent annualised rate in the third quarter, slowing from the April-to-June quarter’s 2.4 per cent pace.

The report was delayed by a record 43-day shutdown of the government. Manufacturing has been hamstrung by President Donald Trump’s sweeping tariffs, but a surge in spending on artificial intelligence has propped up other industries.

Trump has defended the duties as necessary to revive a long-declining US industrial base, though economists argue that effort cannot be accomplished in a short period of time, citing high production and labour costs as among the challenges.

A survey from the Institute for Supply Management on Monday showed its manufacturing PMI contracted for a ninth straight month in November, with tariffs continuing to be cited as a constraint across industries.

Motor vehicle and parts production decreased 2.2 per cent in September after rebounding 3 per cent in August. Durable manufacturing output edged up 0.1 per cent.

Nondurable manufacturing production dipped 0.1 per cent. Mining output was unchanged after rising 0.4 per cent in August.

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Global trade growth is expected to moderate from 4.2% in 2025 to 2.3% in 2026 as the full effects of tariffs weigh on investment and consumption.

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The Institute for Supply Management (ISM) said on Monday (Dec 1) its manufacturing PMI dropped to 48.2 last month from 48.7 in October.

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“Employment declined slightly over the current period with around half of districts noting weaker labour demand,” the Fed said in its Beige Book report.

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Non-defence capital goods orders excluding aircraft, a closely watched proxy for business spending, jumped 0.9 per cent after an upwardly revised 0.9 per cent increase in August.

US core capital goods orders and shipments soar in September

Utilities production rebounded 1.1 per cent. That followed a 3.0 per cent decline in August. Overall industrial production ticked up 0.1 per cent after falling 0.3 per cent in August. Industrial output rose 1.6 per cent on a year-over-year basis. It grew at a 1.1 per cent rate in the third quarter.

Capacity utilisation for the industrial sector, a measure of how fully firms are using their resources, was unchanged at 75.9 per cent in September. It is 3.6 percentage points below its 1972-2024 average.

The operating rate for the manufacturing sector slipped to 75.5 per cent from 75.6 per cent in August. It is 2.7 percentage points below its long-run average. REUTERS

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