Industrial production loses momentum

July 17, 2026

Industrial production edged 0.1% higher in June, below market expectations for a 0.2% gain. It cooled to 1.1% year-over-year, down from 1.7% in May and 1.4% in April. 

Total industrial production grew 4% at an annual rate in the second quarter. Manufacturing notched a 4.7% gain. The strong gains mask slower momentum in June as we move into the third quarter.

Manufacturing came in flat for June. The strength for the quarter all came from a sharp increase in April. Since then, momentum has receded. 

Motor vehicles and parts posted a smaller gain in June (+0.7%) compared to May (+1.8%) and April (+2.8%). The slowdown is notable because retail sales increased in June due to flat new vehicle prices and falling insurance rates. Rising energy input costs and tariffs are weighing on the sector. The USMCA trade agreement is in limbo; it is now subject to annual reviews. That adds to uncertainty about where the next bump in costs for the industry will land. 

Industries related to data centers slowed in June. Computer and electronic products rose only 0.1%, down from a 0.8% gain in May and a 2.1% gain in April. Electronic products fell 0.6% after adding 0.7% in May and 1.1% in April. 

Nondurable goods manufacturing ticked 0.2% higher in June. Petroleum and coal products (+2.1%) and apparel and leather goods (+1.9%) delivered strong gains.

Mining output increased 0.4%, down from 1.1% in May. Utilities posted a 0.4% gain in June, up from -0.7% in May, zigzagging from a 0.8% gain in April. A boost to electric power generation outweighed a loss in natural gas.

The Institute for Supply Management (ISM) manufacturing purchasing managers’ index (PMI) expanded in June for the sixth straight month. The index fell slightly compared to May, signaling slowing momentum. That could slow further as energy prices move higher due to a resumption of the Middle East conflict. 

Another round of tariffs is ramping up to go into effect along with tougher enforcement. That likely pulled some manufacturing activity into the second quarter from later in the year. Manufacturers cited inventory restocking and a desire to front-run future price hikes. Hoarding ahead of additional tariff hikes may buffer the initial effects but cannot stop the momentum in prices.