Producers forge ahead despite uncertainty

May 15, 2026

Industrial production increased 0.7% in April, topping expectations, after dropping an upwardly revised 0.3% in March. Industrial production has risen 1.4% year-over-year, building on a 0.8% gain in March. Manufacturing and utilities production picked up, while mining edged lower.

Utilities jumped 1.9% after falling 1.4% in March. Utilities added 2.7% since this time last year, marking the highest reading since the end of 2025. Natural gas production soared 7.3% in April, after dipping 0.5% in March. Meanwhile, electricity production climbed 1.1% with a 2.1% monthly increase in prices. Despite that positive reading, utilities declined during the last two quarters.

Manufacturing increased 0.6% in April after edging higher in March. Durable goods chalked up gains of 1.2%, led by a 3.7% increase in motor vehicles and parts. Motor vehicle assemblies in April outpaced March by 410,000 with most of the gains in light trucks. 

Aerospace, computers and electronic products and nonmetallic mineral products increased more than one percentage point. The only category that declined was furniture and related products, which posted a 1.8% fall. 

Nondurable goods manufacturing slipped 0.1% on broad-based declines, the largest of which occurred in apparel and leather. Printing and petroleum and coal products logged the only increases. 

Mining decreased a modest 0.1% in April after falling 1.6% in March. Oil and gas well drilling dropped 1.7% and is down 6.3% compared to last year. Oil companies will want to see the increase in prices as steady before committing to new drilling. The US has higher breakeven prices on wells than other countries, for example Saudi Arabia, which drives our need for consistently higher prices.

Business equipment continued to post solid numbers. It was up 1.5% in April and 6% over the past year. Transit equipment jumped 4.2% during April, the highest reading in nearly a year. Information processing products rose 1.7% in April and 7.4% since last year. Investment in AI continues to support business investment. Helium trapped in the Strait of Hormuz is necessary for semiconductor production, so there could be a pullback when inventories are depleted. 

Defense and space equipment added 1.9% in April and 6.5% over the past year. That is the highest mark in two and a half years. Materials production moved up 0.5%, led by a 3.2% increase in consumer parts. Energy recouped part of March’s decline.  

Capacity utilization rose to 76.1%, the highest level since August of last year. Semiconductors and related electronic components were flat with capacity utilization rates at the lowest point in more than six years. Computer and office equipment hit a 15-year high. Overall manufacturing capacity edged up, led by aerospace and motor vehicles and parts.

The Institute for Supply Management (ISM) manufacturing purchasing managers’ index (PMI) has been in expansionary territory for four consecutive months, suggesting that future industrial production will be to the upside. However, this will be challenged by demand destruction due to the closure of the Strait of Hormuz and higher interest rates.