U.S. Manufacturing Production Insights

WASHINGTON (Reuters) – U.S. manufacturing production saw a 0.3% increase in March, following a revised 1.0% rise in February, as reported by the Federal Reserve on Wednesday. Economists had predicted a 0.3% rise, after a previously recorded 0.9% increase.

Year-on-year, factory production rose by 1.0% in March. Manufacturing, which constitutes 10.2% of the overall economy, grew at a 5.1% rate in Q1, recovering from a 1.5% contraction in Q4 of the previous year. However, the new import tariffs initiated by President Donald Trump may threaten this recovery, contributing to a trade conflict with China.

The Institute for Supply Management’s early-month survey painted a bleak picture of the business climate, with tariffs being a major concern for manufacturers.

Highlights from production data:
– Motor vehicle and parts output rose by 1.2% in March, following a sharp 9.2% increase in February.
– Durable goods manufacturing grew by 0.6%, aided by a 1.8% rise in aerospace and miscellaneous transport equipment.
– Nondurable manufacturing production remained stable, with gains in food, apparel, leather, chemicals, plastics, and rubber products, counterbalancing declines in textiles, paper, petroleum, and coal.

Mining production experienced a 0.6% increase after a 1.7% rebound in February. Conversely, utilities production fell by 5.8% due to warmer temperatures diminishing heating needs, following a 1.5% decline in February.

Overall, industrial production dropped by 0.3% after climbing 0.8% in February, but it showed a 1.3% year-on-year increase in March and expanded at a 5.5% annual rate in the first quarter. Capacity utilization within the industrial sector decreased to 77.8%, down from 78.2% in February, remaining 1.8 percentage points below its historical average from 1972–2024. The manufacturing sector’s operating rate rose by 0.2 percentage points to 77.3%, still 0.9 percentage points beneath its long-term average.