Industrial production rose 0.7 per cent in September, the Federal Reserve said on Friday, after a 0.1 per cent gain in August. The G.17 release puts the total index at 104.0 per cent of its 2017 average, 2.2 per cent above a year earlier. Output grew at a 2.8 per cent annual rate in the third quarter.
The number is good. Its composition is narrower than the headline suggests. Utilities output rose 3.5 per cent in the month, while manufacturing rose 0.3 per cent and mining 0.2 per cent.
What moved
The Fed attributed the utilities gain to its indexes for electric and for natural gas utilities. It does not publish each sector's contribution to the monthly change, but its Table 1 gives the weights: manufacturing accounts for 75.89 per cent of the index, utilities for 12.40 per cent and mining for 11.71 per cent. Multiplying each weight by its monthly change, utilities added about 0.43 percentage point to September's total and manufacturing about 0.23 point, with mining adding about 0.02. That is our arithmetic and it is approximate, but it means a sector one-eighth the size of manufacturing did close to twice as much of the lifting.
Within manufacturing, durable goods ticked up 0.1 per cent and nondurables rose 0.4 per cent, led by printing and chemicals. Primary metals, machinery and electrical equipment each rose 1 per cent or more. Output of motor vehicles and parts fell 3.0 per cent. The Fed said all major market groups posted gains except business equipment, which was unchanged. Consumer goods rose 0.7 per cent, as nondurables more than offset a decline in durables, and construction supplies rose 1.0 per cent.
The year and the quarter
Manufacturing is up 1.1 per cent in a year and grew at a 0.7 per cent annual rate in the third quarter. Durable manufacturing grew at a 3.8 per cent annual rate in the quarter, driven in part, the Fed said, by a 28.4 per cent gain in semiconductors and related components. Nondurable output fell at a 1.6 per cent rate. Mining grew at 5.0 per cent annualised, and utilities at 14.8 per cent.
Utilities output is up 8.7 per cent from a year earlier. The release does not give a cause, and we do not offer one.
The Fed also revised August. The total index level for that month went to 103.3 from 103.1, and the monthly change to 0.1 per cent from 0.0. August manufacturing, previously reported down 0.3 per cent, is now down 0.2 per cent.
Spare capacity
Total capacity utilization moved up to 76.9 per cent, 2.5 points below its 1972 to 2025 average. Manufacturing utilization was 75.9 per cent, up 0.1 point and 2.3 points below its long-run average. Mining was 87.5 per cent, 2.3 points above its average. Utilities rose 2.3 points to 73.8 per cent, still well below their average of 84.0.
Manufacturing is the measure most relevant to prices and investment, and it shows slack rather than strain. That sits awkwardly with the price data this week, in which producer prices rose 1.3 per cent in a month. It also differs in tone from the regional surveys. New York posted its best factory reading since December 2021, while the Philadelphia survey showed new orders slowing sharply. The Fed's hard output data for September sit between the two: modest, not booming, and not falling.
What to watch
The Fed will publish its annual revision to industrial production on 24 November, with 2022 as the new base year. It will incorporate Census manufacturing benchmarks for 2023 and 2024 and updated capacity data, and can change the history back to 1972, so the September comparisons above are provisional in a literal sense. The next monthly release covers October. The test is whether manufacturing, not utilities, carries it.
Sources
- Federal Reserve Board, G.17 Industrial Production and Capacity Utilization, 16 October 2026: https://www.federalreserve.gov/releases/g17/current/default.htm
- Federal Reserve Board, G.17 Table 1, Industrial Production: Market and Industry Group Summary: https://www.federalreserve.gov/releases/g17/current/table1.htm
Every figure comes from the Federal Reserve's G.17 statistical release of 16 October 2026, including its summary table and Table 1, which gives the 2025 relative-importance weights used for 2026 changes. The contributions to the monthly change are this publication's arithmetic, multiplying each group's weight by its monthly change; they are approximate and are not figures the Fed publishes. The release does not give a reason for the utilities gain beyond naming electric and natural gas utilities. The comparisons with the regional surveys and producer prices rely on this publication's earlier stories. The analysis is our own.
Topics businessmanufacturingFederal Reserveutilities
