US Factory Output Stalled As June Production Missed Forecasts

Industrial production rose 0.1% and capacity utilization held at 76.1%, with mining and utilities doing the heavy lifting.

What’s going on here?

US factory output stalled in June, leaving overall industrial production up just 0.1% as mining and utilities did most of the work.

What does this mean?

The Federal Reserve’s industrial production report combines output from manufacturers, miners, and utilities, so the headline number can hide what’s happening inside factories. In June, production rose 0.1% for a second straight month, below the 0.2% economists expected, because manufacturing was flat while mining and utilities each climbed 0.4%. Capacity utilization – basically how much of the nation’s industrial “machinery” is being used – held at 76.1%, a touch under forecasts, suggesting there’s still slack rather than a scramble for scarce plant time. That mix matters because a mining- and utility-led gain says less about demand for everyday goods, and a factory sector with spare capacity tends to have less leverage to push through price hikes.

Why should I care?

For markets: The 76.1% capacity-utilization print doubles as an inflation pressure gauge.

Capacity utilization is often treated as a proxy for pricing power: when factories are running hot, companies are more likely to face overtime, bottlenecks, and higher input costs – and to try passing those on in prices. With utilization stuck near 76% and manufacturing output flat, producers can often meet orders by using idle capacity instead, which can soften goods inflation even if the headline production number is slightly positive. That’s why rate markets can react more to “slack manufacturing” than to a modest overall gain driven outside factories, especially in measures tied to inflation expectations like Treasury inflation breakevens and in longer-duration Treasury yields.

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Originally Posted July 17, 2026 – US Factory Output Stalled As June Production Missed Forecasts