Factory floors picked up speed in September after a slip in August. The Federal Reserve reported a 0.3% rise in manufacturing production, right in line with the median estimate from Bloomberg's economist survey. August's figure was revised to a 0.2% decline.
Industrial production - a broader gauge that includes manufacturing, mining and utilities - rose 0.7%, the largest monthly increase in five months. Utilities output jumped 3.5%, which may reflect heavier power use during the warmest September on record. Mining activity also increased.
Semiconductor production moved up more than 2% from August and stood nearly 20% above its level in September 2025. Production in machinery, metals, and chemicals ticked higher as well. By market group, construction supplies and business supplies posted solid gains, and consumer goods output rose 0.7%, the most since February.
Autos were the drag. Production of motor vehicles and parts fell 3% from August, the sharpest drop since October of last year, which restrained the overall factory advance. Excluding vehicles, manufacturing rose 0.5%, the biggest increase since April. After a drop the month before, defense and space equipment output increased 0.4%.
When the economy sends new signals, stay informed with the free Market Briefs newsletter that breaks down markets in minutes
The pickup suggests producers are riding steady consumer demand and firm business investment tied to an artificial intelligence buildout. As BMO Capital Markets' senior economist Sal Guatieri put it, "US factories continue to churn out modest increases in goods, driven by the AI boom and healthy consumer demand." At the same time, manufacturers face higher input costs and supply chain hurdles linked to wars and tariffs.
Those cost pressures showed up at the border. Separate data earlier reported the import price index from the Bureau of Labor Statistics recorded an 8.1% increase over September 2025 amid broad-based gains, and, excluding petroleum, registered the largest year over year gain since May 2022. On autos, the third straight monthly decline came after "news that the market share of US-made autos in the Canadian market plunged in the first half of this year due to the effects of Canada's counter tariffs," according to Bradley Saunders, North America economist at Capital Economics.
The bottom line: momentum in chips, construction and business supplies helps industrials and AI supply chains, while autos and rising import costs remain the wild cards for margins and earnings guidance into year end.
Even when headlines focus on details, sign up for the free Market Briefs to get clear market and economy context each morning
