Industrial production rebounded

December 3, 2025

Industrial production ticked up 0.1% in September, in line with expectations, after dropping a downwardly revised -0.3% in August. Industrial production has risen 1.6% year-over-year, building on a 0.9% gain the previous month. Flat manufacturing production, saddled with a drag from consumer goods, was bolstered by gains across other sectors, mostly utilities.

The rebound in utilities is welcome following a soft August. Residential electricity prices rose, even as electricity production jumped 1.3%. Despite that positive reading, utilities production has declined during the last two quarters.

Durable goods manufacturing edged up 0.1%, led by a 1.8% increase in electrical equipment, appliances and components. Wood products showed the largest decline, dropping 3.5%, followed by a 2.2% loss in motor vehicles and parts.

Importers who purchased ahead of tariffs are now liquidating inventories; that could show up as lower orders. Nondurable goods manufacturing slipped 0.1% on broad-based declines, the largest of which occurred in printing. Plastics and rubber products were the only profitable nondurable items while food, beverage and tobacco products manufacturing has come in flat since August.

Business equipment climbed 0.7%, now up 10 of the last 11 months, with all products increasing. Industrial and information processing took the lead. Business equipment production is now up 9.1% year-over-year, the highest since May 2021. Consumer goods fell 0.6% with declines in durable and nondurable goods. Automotive products fell 2.9%.

Defense and space equipment bounced back to 0.5% in September after losing ground in August. Materials production rose 0.4%, primarily on a 1.2% increase in equipment parts. Energy regained much of August’s decline, while mining was flat. Deregulation has not been enough to offset the drag from tariffs. Oil prices have continued to decline since September, hinting at a greater likelihood of weak readings in the future.

Capacity utilization remained flat in September. In year-over-year terms, that was only the third non-negative month in three years. Semiconductors and related electronic components fell to the lowest point since May 2020. Communications equipment came in at a 20-year low. Capacity utilization for utilities bounced back from its lowest-ever reading in August. Overall manufacturing capacity edged up, led by high-technology industries.