U.S. industrial production increased 0.7% in September 2026 from the previous month, exceeding market expectations of a 0.4% gain and recording its strongest monthly advance in five months, according to figures attributed to the Federal Reserve.
The increase reflected growth across manufacturing, mining and utilities, with electricity and natural gas production contributing to the overall improvement.
For the third quarter, industrial production expanded at an annualized rate of 2.8%, indicating continued growth in the country’s industrial sector.
Utilities Lead September’s Increase
Utilities production rose 3.5% in September, supported by increased output from both electric and natural gas utilities.
Manufacturing output, which accounts for approximately 78% of total U.S. industrial production, increased 0.3%, matching economists’ expectations.
Mining production also advanced, rising 0.2% during the month.
The figures indicate that industrial activity improved across all three major categories, although the pace of growth varied significantly between sectors.
Industrial Capacity Utilization Improves
The Federal Reserve’s capacity utilization measure increased to 76.9% in September.
Capacity utilization indicates how much of the country’s available industrial production capacity is being used.
Despite the improvement, the September reading remained 2.5 percentage points below its long-term average for the period from 1972 through 2025.
This suggests that U.S. industries continued to operate below their historical average capacity levels, even as production increased.
Industrial Output Expands in Third Quarter
For the July-to-September period, U.S. industrial production grew at an annualized rate of 2.8%.
The quarterly increase provides a broader view of industrial activity beyond September’s monthly improvement.
Industrial production is an important economic indicator because it measures changes in the output of factories, mines and utilities.
Higher production can reflect stronger industrial activity, although monthly changes may also be influenced by factors such as weather conditions and fluctuations in energy demand.
The September figures show that U.S. industrial output gained momentum, with utilities recording the strongest monthly increase among the major sectors.
However, capacity utilization remaining below its historical average indicates that available production resources were not being used at their typical long-term rate.
