US manufacturing output posts biggest gain in 11 months in January

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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