US Industrial Sector Powers Up, But Is This Sustainable?
US industrial production rose in April by the most in over a year, pointing to nascent momentum in the sector. The 0.7% increase in output at factories, mines and utilities followed a revised 0.3% drop in March, Federal Reserve data out on Friday showed.
Industrial output increased by +1.4%yoy in Apr (Mar-26: +0.8%yoy), recording the highest reading in three months. Utilities jumped +2.7%yoy, manufacturing rose +1.3%yoy and mining edged up +0.2%yoy. On a monthly basis, industrial production rebounded by +0.7%mom (Mar-26: -0.3%mom) marking the highest reading in 14 months.
A stronger-than-expected performance in the manufacturing sector, which constitutes roughly 78% of total industrial production, led the surge with a +0.6%mom increase, outpacing consensus forecasts of +0.2%mom. This was attributable to acceleration in motor vehicle assembly and demand for technology goods amid ongoing artificial intelligence spending boom. Even when stripping out the volatile automotive sector, manufacturing output excluding motor vehicles and parts managed a steady +0.3%mom gain. Meanwhile, utilization rate in the manufacturing sector rose to 76.1% during the month (Mar-26: 75.7%), but remaining 3.3 percentage points below its long-run (1972–2025) average.
Utilities output provided a significant boost, surging +1.9%mom due to increased demand across both electric and natural gas providers. Industrial production was weighed by the extractive sector, where mining output edged down a marginal -0.1%mom.
Manufacturing remains resilient thanks to tax cuts and data centre demand, though current strength is likely inflated by front-loaded stockpiling. MBSB noted that despite a fragile truce, the ongoing closure of the Strait of Hormuz poses severe supply chain risks, keeping near-term outlook risks tilted to the downside as input and energy costs threaten to climb higher or remain elevated.
