WASHINGTON, Feb 18 (Reuters) – U.S. factory production increased by the most in 11 months in January, offering hope for a manufacturing sector that has been squeezed by import tariffs and high interest rates.
Manufacturing output rose 0.6% last month, the largest gain since February 2025, after being unchanged in December, the Federal Reserve said on Wednesday.
Economists polled by Reuters had forecast production for the sector, which accounts for 10.1% of the economy, would rise 0.4%. Output in December was previously reported to have risen 0.2%.
Production at factories advanced 2.4% on a year-over-year basis in January. Manufacturing has been hobbled by President Donald Trump’s sweeping tariffs, which business leaders say have raised costs for factories and consumers.
Trump has defended his punitive import duties as necessary to restore a long-declining domestic industrial base. The manufacturing sector lost more than 80,000 jobs in 2025. Some segments like technology have thrived amid an artificial spending boom.
Economists are optimistic the boost from AI will broaden to the rest of manufacturing, which they also expect to get a lift from tax cuts.
The increase in factory output last month occurred across the board. Durable goods manufacturing output rose 0.8%, with strong gains in nonmetallic mineral products, machinery, computer and electronic products, miscellaneous durable goods, as well as motor vehicles and parts, which rose for the first time since last August.
Nondurable goods manufacturing output rose 0.4%, lifted by gains in the production of paper, printing and support as well as chemicals, plastics and rubber products.
Mining output fell 0.2% after decreasing 0.9% in the prior month. Utilities production increased 2.1% as the tailwind from freezing weather persisted. That reading followed a 3.0% jump in December. Overall industrial production advanced 0.7% after gaining 0.2% in December. Industrial increased 2.3% on a year-over-year basis in January.
Capacity utilization for the industrial sector, a measure of how fully firms are using their resources, increased to 76.2% from 75.7% in December. It is 3.2 percentage points below its 1972–2025 average. The operating rate for the manufacturing sector rose four-tenths of a percentage point to 75.6%. It is 2.6 percentage points below its long-run average.
(Reporting by Lucia Mutikani; Editing by Paul Simao)
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