US manufacturing output rises in September

WASHINGTON, Oct 16 (Reuters) - US factory production ‌increased in September, ​but lost ​considerable momentum in the third quarter amid headwinds from the Middle East conflict, which has snarled supply chains and raised energy prices.

Manufacturing output rebounded 0.3% last month ‌following a revised 0.2% decline in August, the Federal Reserve said on Friday. The ⁠rise was in line with economists' expectations. Factory production was previously estimated to have dropped 0.3% in August. Output advanced ‌1.1% on a year-over-year basis in ‌September. It grew at a 0.7% annualized rate in the third quarter after accelerating at a 5.6% pace in the second quarter.

Manufacturing accounts for about 9.4% of the economy. While an ​AI infrastructure buildout and businesses rebuilding inventories to meet robust domestic demand are supporting factory activity, higher energy prices, a trade war with Canada and rising borrowing costs pose downside risks ⁠to production.

Diesel prices have surged to a record high as the US-Israeli war with Iran drags on, and economists say the economy could ​soon feel the effects through higher prices for goods, including at the supermarket, which could weigh on demand.

Durable goods manufacturing production edged up 0.1%, lifted ​by gains in the output of primary metals, machinery, and ‌electrical equipment, appliances and components. Production of motor vehicles and parts fell 3.0%. Durable goods manufacturing output increased at a 3.8% rate in the third ⁠quarter, partly boosted by a 28.4% surge in the production of semiconductors and related electronic components related to the AI spending boom.

Nondurable manufacturing production rose 0.4% over the month amid gains in printing and chemicals output. Nondurable manufacturing ⁠output, however, fell 1.6% last quarter.

Mining production rose 0.2% last month and grew at a 5.0% rate in the ​July-September quarter. Utilities jumped 3.5% amid demand for air-conditioning. Utilities output increased at a 14.8% pace in the third quarter.

Overall industrial production rose 0.7% last month after gaining 0.1% in August. Industrial output increased 2.2% year-on-year in ‌September. It advanced at a 2.8% pace in the third quarter after growing at a 4.8% rate in the second quarter.

Capacity utilization for the industrial ‌sector, a measure of how fully firms are using their resources, rose to 76.9% last month from 76.4% in ⁠August. It is 2.5 percentage points ‌below its 1972–2025 average. The operating ​rate for the manufacturing sector edged up to 75.9% from 75.8% in August. It is 2.3 percentage points below its long-run average.

(Reporting by Lucia Mutikani; Editing by ‌Andrea Ricci )

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