United States industrial production rose by the most in more than a year in April, signalling growing momentum in the sector despite mounting cost pressures linked to tariffs and the Iran conflict.
Output at factories, mines and utilities increased 0.7% in April, following a revised 0.3% decline in March, according to Federal Reserve data released Friday.
The result exceeded market expectations for a 0.3% increase.
Manufacturing output, which accounts for around three-quarters of total industrial production, rose 0.6% during the month. Mining output edged lower, while utilities output rebounded.
The data suggested the manufacturing sector remained resilient even as tariffs and the Iran war pushed up input costs, aided by tax cuts and strong demand linked to the expansion of data centres.
However, some economists warned that part of the increase may reflect businesses stockpiling goods ahead of potential further price rises.
ANZ analysts said: "Production has been trending higher since the start of this year, seemingly reinforced by front-loading of demand ahead of potential supply-chain disruption ... Outside of AI, business investment is weak, while the consumption outlook is facing headwinds.
"On that basis, it is difficult to see production strength being maintained.”
With a fragile truce in place in the Middle East and the Strait of Hormuz still effectively closed, manufacturers could face higher fuel and materials costs in coming months. Economists also expect inflationary pressures to persist even if shipping flows normalise.
By industry, motor vehicles and parts led gains, with output rising 3.7%. Computers and electronic products, aerospace and nonmetallic mineral products also posted solid increases.
Industries benefiting from the data centre build-out, including electrical equipment and fabricated metals, also recorded gains.
Production of defence and space equipment rose for a fifth consecutive month as military spending continued to support growth while the government replenished supplies depleted during the conflict.
Meanwhile, oil and gas well drilling declined for a second straight month. The Energy Information Administration (EIA) said last week it expects U.S. crude production to reach a record 14.1 million barrels per day in 2027 as producers gradually increase output in response to higher oil prices, although production is forecast to remain near 13.6 million barrels per day this year.
Capacity utilisation at factories rose to 75.8%, the highest level since September, while the overall industrial utilisation rate also increased.
