US manufacturing output unexpectedly increases in December

• Factory production increased 0.2% in December versus expectations of a 0.2% decline, but dropped at a 0.7% annualized rate in Q4 after growing 2.8% in Q3
• Primary metals output jumped 2.4% while motor vehicle production fell 1.1%, marking the fourth consecutive monthly decline in auto manufacturing
• Manufacturing lost 68,000 jobs in 2025 as Trump's tariffs created mixed effects, benefiting industries like primary metals facing foreign competition while hurting other segments

Summary: US Manufacturing Output Unexpectedly Rises in December

Key Findings:

U.S. manufacturing output unexpectedly increased 0.2% in December, following an upwardly revised 0.3% gain in November, according to the Federal Reserve. Economists had forecast a 0.2% decline. Despite the monthly gain, factory production contracted at a 0.7% annualized rate in Q4 after growing 2.8% in Q3.

Sector Performance:

Primary metals production surged 2.4%, driving the monthly increase, while electrical equipment, appliances, and aerospace sectors also posted significant gains. However, motor vehicle production fell 1.1%, marking the fourth consecutive monthly decline and dropping 2.8% year-over-year.

Annual Context:

Manufacturing output rose 2.0% year-over-year in December. The sector, representing 10.1% of the U.S. economy, shed 68,000 jobs in 2025, reflecting ongoing structural challenges.

Broader Industrial Data:

Overall industrial production increased 0.4% in December, matching November's gain, and rose 2.0% year-over-year. Mining output fell 0.7%, while utilities production jumped 2.6% due to frigid temperatures driving heating demand.

Market Implications:

The data reveals mixed signals for U.S. manufacturing. While President Trump's import tariffs have supported primary metals producers facing foreign competition, they've created headwinds for other manufacturing segments. Economists note structural issues including worker shortages limit potential for a manufacturing renaissance, though some improvement is expected in 2026 as Trump's tax cuts take effect. The continued decline in automotive production and Q4 contraction suggest underlying weakness despite December's positive headline number.