U.S. factory production registered its biggest monthly increase in 11 months in January, providing a lift to a manufacturing sector that has faced pressure from higher import duties and elevated interest rates. The Federal Reserve said on Wednesday that manufacturing output rose 0.6% in January, the strongest monthly rise since February 2025, following a flat reading in December.
Economists surveyed by Reuters had expected a 0.4% gain for the sector, which represents 10.1% of the U.S. economy. The Fed also noted a revision to the prior month: production in December was previously reported as up 0.2% before the latest data adjustment. On a year-over-year basis, factory output was up 2.4% in January.
Policy and labor context
Manufacturing has been constrained by sweeping tariffs imposed by President Donald Trump, which industry leaders say have increased costs for both factories and consumers. The president has defended the duties as necessary to rebuild a domestic industrial base he views as having declined over decades. The sector experienced significant job losses in 2025, shedding more than 80,000 positions over the year.
At the same time, some segments within the industrial complex, notably technology-related areas, have benefited from a concentrated spending surge. Economists cited in the data release signaled optimism that gains driven by artificial intelligence could widen to additional parts of manufacturing, and that tax cuts may also provide further support.
Breadth of the January increase
The January output gain was broad-based. Durable goods manufacturing climbed 0.8%, buoyed by notable increases in nonmetallic mineral products, machinery, computer and electronic products, miscellaneous durable goods, and motor vehicles and parts. The latter category marked its first monthly rise since last August.
Nondurable goods manufacturing climbed 0.4%, led by higher production of paper, printing and support activities, as well as chemicals, plastics and rubber products.
Other industry components
Outside manufacturing, mining output slipped 0.2% in January after a 0.9% decline the month prior. Utilities production rose 2.1% as freezing weather continued to provide a temporary demand boost; utilities had surged 3.0% in December.
Overall industrial production increased 0.7% in January, following a 0.2% rise in December, and was up 2.3% from the same month a year earlier.
A key utilization metric moved higher: capacity utilization for the industrial sector rose to 76.2% from 75.7% in December. That level remains 3.2 percentage points below the 1972-2025 average. The operating rate for the manufacturing sector climbed 0.4 percentage point to 75.6%, leaving it 2.6 percentage points under its long-run average.
What the data show
The January prints indicate a sector-wide uptick in production with uneven performance across supporting industries. While utilities provided a weather-related boost and mining continued to soften, both durable and nondurable goods manufacturers contributed to the months leading increase in factory output.
These figures arrive amid competing influences on manufacturing: tariff-driven cost pressures, recent job losses, pockets of strong technology spending, and the prospect of policy-driven supports such as tax reductions that economists expect could help broaden growth within the sector.