U.S. factory production increased marginally in February as manufacturing remained constrained by tariffs on imports, and the conflict in the Middle East could raise operating costs. Other data on Monday showed sentiment among single-family homebuilders nudging up in March. Manufacturing and the housing market have been hardest hit by higher interest rates and President Donald Trump’s sweeping tariffs, with business leaders and builders saying the duties had increased costs. Trump has defended the tariffs, which have been struck down by the U.S. Supreme Court, as necessary to protect domestic manufacturing, though about 100,000 factory jobs have been lost since January 2025.
Manufacturing output rose 0.2% last month after an upwardly revised 0.8% gain in January, the Federal Reserve said. Economists polled by Reuters had forecast production for the sector, which accounts for 10.1% of the economy, rising 0.1% after a previously reported 0.6% rise in January. Production at factories advanced 1.3% year on year in February.
Motor vehicle production increased 1.7% after surging 2.4% in January. There were also solid gains in the output of computer and electronic products as well as electrical equipment, appliances and components, likely reflecting an artificial intelligence spending boom.