New Numbers: U.S. Manufacturing Production Remained Flat in September 2025

U.S. manufacturing production showed no growth in September, remaining flat after a 0.1 percent gain in August, according to Federal Reserve data released Wednesday. The report, delayed by a 43-day government shutdown, confirms that manufacturing activity continues to face headwinds from import tariffs despite pockets of strength in technology-related sectors.

Factory Output Misses Modest Growth Expectations

Manufacturing output, which accounts for 10.1 percent of the U.S. economy, came in below economist forecasts of a 0.1 percent increase, Reuters reported. On a year-over-year basis, factory production increased 1.5 percent in September.

Third-quarter manufacturing output grew at a 1.3 percent annualized rate, slowing from the second quarter’s 2.4 percent pace. This deceleration reflects ongoing challenges facing the sector, particularly related to trade policy and cost pressures.

Tariffs Continue to Constrain Manufacturing Activity

The Institute for Supply Management’s manufacturing PMI contracted for a ninth consecutive month in November, with tariffs cited as a constraint across industries. Manufacturing has faced pressure from tariffs on imports, though spending on artificial intelligence has supported other sectors of the economy.

President Trump has defended the duties as necessary to revive the U.S. industrial base. However, economists note that rebuilding domestic manufacturing capacity cannot be accomplished quickly, citing high production costs and labor expenses as significant challenges.

Motor vehicle and parts production decreased 2.2 percent in September after rebounding 3.0 percent in August. Durable manufacturing output edged up 0.1 percent, while nondurable manufacturing production dipped 0.1 percent.

Capacity Utilization Remains Below Historical Average

Capacity utilization for the industrial sector held steady at 75.9 percent in September, according to the Federal Reserve. This metric, which measures how fully firms are using their resources, sits 3.6 percentage points below its 1972-2024 average.

The operating rate for the manufacturing sector slipped to 75.5 percent from 75.6 percent in August, remaining 2.7 percentage points below its long-run average. Lower capacity utilization typically indicates that manufacturers have room to increase output without significant capital investment. Still, it also suggests that current demand does not justify fuller use of existing capacity.

According to the U.S. Census Bureau, capacity utilization trends provide insight into manufacturers’ expectations about future demand and their willingness to invest in expansion.

Broader Industrial Production Shows Slight Gain

Overall industrial production, which includes manufacturing, mining, and utilities, ticked up 0.1 percent in September after falling 0.3 percent in August. Mining output remained unchanged after rising 0.4 percent in August, while utilities production rebounded 1.1 percent following a 3.0 percent decline in August.

Industrial output rose 1.6 percent on a year-over-year basis and grew at a 1.1 percent rate in the third quarter. These modest gains reflect an economy where service sectors continue to outpace manufacturing growth.

What Flat Production Means for Manufacturers

Flat production data suggests manufacturers are operating in a holding pattern, maintaining current output levels without significant expansion or contraction. For plant managers and financial leaders, this environment requires careful attention to cost structures, capacity planning, and order pipelines.

Manufacturers facing flat demand should focus on operational efficiency, working capital management, and margin protection. Our team helps manufacturers analyze production trends, manage cash flow through uncertain periods, and identify opportunities to improve profitability even when top-line growth stalls. Visit our Manufacturing Services page to learn how we support data-driven decision-making.

Make Operational Decisions Backed by Data, Not Guesswork

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