GMC Hummer EVs on an assembly line at he General Motors Factory ZERO assembly plant in Detroit, Mich.MANDEL NGAN
U.S. factory production unexpectedly increased in December amid a surge in primary metals output that offset a decline at motor vehicle assembly plants, but activity contracted in the fourth quarter against the backdrop of challenges from import tariffs.
Manufacturing output rose 0.2 per cent last month after an upwardly revised 0.3 per cent gain in November, the Federal Reserve said on Friday. Economists polled by Reuters had forecast production for the sector, which accounts for 10.1 per cent of the economy, falling 0.2 per cent after a previously reported unchanged reading in November.
Production at factories increased 2.0 per cent on a year-over-year basis in December. But it dropped at a 0.7 per cent annualized rate in the fourth quarter after growing at a 2.8-per-cent pace in the third quarter. Manufacturing has been hurt by President Donald Trump’s sweeping import duties, which he has ironically defended as needed to restore a long-declining domestic industrial base.
Though the levies have shored up industries like primary metals that faced stiff foreign competition, and an artificial intelligence investment boom has supported certain segments, the rest of manufacturing has struggled, with the sector shedding 68,000 jobs in 2025.
Economists have long argued a manufacturing renaissance was impossible because of structural issues, including worker shortages. They expected some improvement this year as Trump’s tax cuts take effect.
Primary metals production jumped 2.4 per cent. There were also sizeable increases in the output of electrical equipment, appliances and components as well as aerospace and miscellaneous transportation. But motor vehicle production dropped 1.1 per cent, declining for a fourth straight month. Motor vehicle output fell 2.8 per cent on a year-on-year basis in December.
Mining output fell 0.7 per cent after rebounding 1.7 per cent in the prior month. Frigid temperatures boosted demand for heating, lifting utilities production 2.6 per cent. Utilities output dropped 0.3 per cent in November. Overall industrial production increased 0.4 per cent after a similar gain in November. Industrial output rose 2.0 per cent on a year-over-year basis in December. It grew at a 0.7-per-cent rate in the fourth quarter.