U.S. factory output rose 0.6% in January, marking the largest monthly increase since February 2025 and signaling a rebound for the manufacturing sector after months of tariff pressures and higher interest rates, according to Reuters.
The Federal Reserve reported that the manufacturing sector, which accounts for 10.1% of the U.S. economy, had been flat in December. Economists surveyed by Reuters had expected a 0.4% increase. On an annual basis, production grew 2.4% in January.
The manufacturing sector had faced significant challenges from broad tariffs imposed under President Donald Trump, which business leaders said raised costs for factories and consumers. Trump defended the tariffs as necessary to support domestic industry, even as the sector lost over 80,000 jobs by 2025. Meanwhile, technology sectors thrived amid a surge in AI-related spending.
Economists anticipate that AI-driven gains will extend to other manufacturing industries, which could also benefit from tax cuts.
Output of durable goods rose 0.4%, led by increased production in paper and printing, chemicals, plastics, and rubber products. Mining output fell 0.2% after a 0.9% decline in December, while utility production climbed 2.1% due to continued cold-weather effects, following a 3% jump in December.
Overall industrial production increased 0.7% in January after a 0.2% rise in December, with annual industrial production growth reaching 2.3%.
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