U.S. Manufacturing Output Rises Unexpectedly as Auto Production Rebounds

Despite tariffs continuing to cast a shadow over the manufacturing sector, U.S. factory output unexpectedly grew in August, driven by a rebound in automobile and certain non-durable goods production.

The U.S. Federal Reserve (Fed) released data on Tuesday showing that manufacturing output increased by 0.2% month-over-month in August, while the July data was revised down to a 0.1% month-over-month decline. A prior Reuters survey of economists had predicted that manufacturing output in August would decrease by 0.2% month-over-month (with manufacturing accounting for 10.2% of the U.S. economy), and the previously released July manufacturing output data showed no change month-over-month.

Manufacturing output in August increased by 0.9% year-on-year.

The tariff policies implemented by U.S. President Donald Trump (including a 50% tariff on steel and aluminum and a 25% tariff on automobiles and auto parts) have put pressure on some sectors of the manufacturing industry, but the surge in spending related to artificial intelligence has driven growth in other areas.

Trump stated that these tariffs are crucial for revitalizing the long-declining American industrial base, but economists believe this goal cannot be achieved in the short term and point out that high production costs and labor costs are among the main challenges.

In August, the output of automobiles and parts rebounded by 2.6% month-on-month, compared to a 0.7% month-on-month decline in July. However, there was a decline in the output of metal products and machinery. The output of the durable goods manufacturing industry increased by 0.2% month-on-month in August, compared to a 0.3% month-on-month increase in July.

In August, the output of the non-durable goods manufacturing industry rebounded by 0.3% month-on-month, compared to a 0.5% month-on-month decline in July. Among them, the output of textiles, petroleum, and coal products increased, while the output of plastic and rubber products decreased; the output of chemicals, food, beverages, and tobacco products all rose.

In August, mining output rebounded by 0.9% month-on-month, following a 1.5% month-on-month decline in July; utility output decreased by 2.0% month-on-month, compared to a 0.7% month-on-month decline in July. Overall industrial output rose slightly by 0.1% month-on-month in August, after a 0.4% month-on-month decline in July; industrial output increased by 0.9% year-on-year.

In August, the industrial sector's capacity utilization rate (an indicator measuring the extent to which enterprise resources are fully utilized) remained steady at 77.4%, which is 2.2 percentage points below the 1972-2024 average. The manufacturing capacity utilization rate in August rose slightly by 0.1 percentage point to 76.8%, 1.4 percentage points below the long-term average.