US Factory Output Falls 0.3% as Utilities Keep Industry Flat
August industrial production was flat because a 1.8% increase in utilities offset weaker factories. Total capacity utilisation held at 76.3%; the deterioration was concentrated in manufacturing.
US industrial production was unchanged in August. Manufacturing fell 0.3%, mining increased 0.1% and utilities jumped 1.8%, according to the Federal Reserve’s September 18 release.
The manufacturing decline ended seven consecutive monthly gains. Factory capacity utilisation fell 0.3 percentage point to 75.7%, which the Fed said was 2.5 percentage points below its long-run average.
Total industrial utilisation did something different: it remained unchanged at 76.3%.
The separation is important for the macro signal. Factory slack increased in August, but the release does not show an equivalent deterioration across the industrial system.
Equipment output remains unusually strong
Business-equipment production fell 0.5% from July but was still 7.1% above its year-earlier level. Construction supplies dropped 0.7%.
That leaves a striking gap between current manufacturing breadth and the level of investment-related equipment production.
The aggregate business-equipment series cannot establish how much of that annual strength comes from AI infrastructure, computing hardware, electrical equipment or unrelated investment categories. The Fed release supports the 7.1% figure; it does not support an attribution to AI.
That narrower conclusion is still useful. The US entered September with more spare capacity inside manufacturing while an important equipment series remained substantially above 2025 levels.
The FOMC described a similarly uneven economy two days earlier. It said activity was expanding at a solid pace, domestic spending remained resilient and capital investment was robust while inflation remained elevated. The Fed raised the federal-funds target range by 25bp to 3.75%-4.00%.
August therefore weakens the case for broad factory acceleration without establishing that the capital-spending cycle has rolled over.
One monthly release cannot settle that question, and the Fed’s industrial data are subject to annual revision. The present evidence is more specific: cyclical manufacturing has softened, factory utilisation is low by historical standards, and business-equipment output remains 7.1% above a year ago.
That is an industrial economy becoming more uneven, not one moving uniformly into contraction.