U.S. manufacturing output posts largest gain in 11 months in January

U.S. factory production rose 0.6% in January, the biggest monthly increase since February 2025, and overall industrial production advanced 0.7% as capacity use ticked higher.

U.S. factory production rose 0.6% in January, the largest monthly gain since February 2025. The Federal Reserve reported the increase after output was unchanged in December. The manufacturing sector accounts for about 10.1% of the U.S. economy and has been affected by import tariffs and higher interest rates. Economists and policymakers are watching how AI-related demand and tax policy could influence future production. Key figures: - Manufacturing output increased 0.6% in January, the biggest monthly rise since February 2025, after being unchanged in December. - Production at factories was up 2.4% year-over-year, and economists polled had forecast a 0.4% monthly gain. - Durable goods output rose 0.8% with gains in nonmetallic mineral products, machinery, computer and electronic products, miscellaneous durables, and motor vehicles and parts (which rose for the first time since last August). - Non-durable goods output rose 0.4%; mining fell 0.2%; utilities rose 2.1%; overall industrial production advanced 0.7% in January. - Capacity utilization for the industrial sector increased to 76.2% from 75.7%, and the manufacturing operating rate rose to 75.6%, both remaining below long-run averages. Summary: The January rise represents a modest recovery across multiple factory categories and has prompted economists to note potential support from AI-driven demand and tax changes. The sector continues to face headwinds from import tariffs and higher interest rates, and manufacturing lost more than 80,000 jobs in 2025; Undetermined at this time.