US Factory Production Rebounds on Semiconductors, Supplies

US factory output rebounded in September after slipping a month earlier, consistent with an upswing this year in manufacturing largely tied to capital investment.

Production at manufacturers rose 0.3% after a revised 0.2% August decrease, according to Federal Reserve data out Friday. The September increase matched the median forecast in a Bloomberg survey of economists.

Total industrial output, which also includes mines and utilities, jumped 0.7% — the most in five months. Utility production increased 3.5%, possibly reflecting strong power demand due to the warmest September on record. Mining output also rose.

The pickup in factory output last month shows producers are benefiting from resilient consumer demand as well as solid business spending amid a boom in investment in artificial intelligence.

“US factories continue to churn out modest increases in goods, driven by the AI boom and healthy consumer demand,” Sal Guatieri, senior economist at BMO Capital Markets, said in a note.

At the same time, manufacturers are wrestling with higher input costs and supply-chain challenges brought about by wars and tariffs.

Separate data out earlier showed the biggest annual advance in import prices in more than four years. The Bureau of Labor Statistics’ import price index rose 8.1% last month from September 2025 in a broad advance. Even excluding a surge in petroleum products, the gauge posted the largest year-over-year gain since May 2022.

The Fed’s report showed production of semiconductors increased more than 2% from the prior month and nearly 20% from September 2025. Output of machinery, metals and chemicals also picked up.

Auto Production

At the same time, production of motor vehicles and parts declined 3% from the prior month, the most since October of last year, restraining the overall advance in factory output. Excluding motor vehicles, manufacturing output increased 0.5% — the most since April.

The third straight decline in auto production follows “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,” Bradley Saunders, North America economist at Capital Economics, said in a note.

Output of defense and space equipment rose 0.4% after declining in the prior month. By market group, production of construction supplies and business supplies posted healthy advances. Output of consumer goods rose 0.7%, the most since February.