Industrial Production Trends

Forget the tired "manufacturing is dying" narrative. Advanced manufacturing — Chemicals (NAICS 325), Machinery (333), Computer & electronic products (334), and Transportation equipment (336), where 41% of workers hold a bachelor's degree or higher — is ripping higher, with the index up nearly 4 points in just the last 12 months, more than the entire gain of the prior decade combined. These four subsectors are 44% of manufacturing value added and explain essentially all of the net growth the sector has produced since 2022. The rest of manufacturing — where only 24% of workers hold a bachelor's — tells the opposite story: down 6% over the decade and still falling. Two manufacturing economies, moving in opposite directions, and the gap is widening fast. Methodology. Monthly seasonally-adjusted industrial production indexes come from the Fed. The two aggregate lines are Törnqvist chain indexes built directly from the Fed's published Relative Importance Weights, so "Advanced" and "Rest" recombine to the Fed's own total manufacturing IP up to rounding. Both are rebased to Jan 2016 = 100 and shown as trailing 12-month moving averages. What's driving the boom. This is what industrial policy plus a capex supercycle looks like when they hit the same industries at the same time. CHIPS, IRA, and the Infrastructure Act directed hundreds of billions into semiconductors, batteries, clean energy capital equipment, pharmaceuticals, and defense. Then the AI capex boom landed on top, pulling massive demand for semiconductors, electrical equipment, and power gear. Rising defense budgets are layering in aerospace demand. The future of American manufacturing is being built by the high-IP, high-skill end of the sector, and the gap with everything else is only going to keep widening. #manufacturing #AI

Despite claims that the freight recession is over, those of you who follow the public less-than-truckload (LTL) carriers note that most LTL outfits have been reporting declining year-over-year volumes for October and November (e.g., https://lnkd.in/gJ9Cf-VF). Continued soft volumes in the LTL space stem mostly from ongoing weakness in the industrial economy (e.g., manufacturing). In that regard, I wanted to share one industrial production series, focusing specifically on production of goods made by machine shops, turned products, and screws/nuts/bolts (https://lnkd.in/gnYJjMD8) that does a good job of capturing inflections in freight market cycles. One chart. Thoughts: •These industrial production data show seasonally adjusted physical unit output for this 4-digit industry. Crucially, the BEA estimates only 15% of the consumption of goods belonging to this industry are imported, suggesting an ongoing important role for domestic manufacturing (accounting for ~$70 billion in shipments each year: https://lnkd.in/g4tp2fr8). •As can be seen, during normal freight cycles, upticks of production in this sector correspond quite closely to the onset of bull market pricing cycles in late 2013/early 2014 and mid-2017. Equally, downturns in production correspond to bearish conditions. •The fact production didn’t start dropping till late Q3 2023 (about a year after the freight recession started) can be easily explained by the rampant raw material and labor shortages in 2021 and 2022 creating very large increases in order backlogs (https://lnkd.in/gB4iMH2j) that supported production even after new orders had cooled down. Implication: production by machine shops in the USA merits close monitoring as we move into 2025. An uptick of production would be another indicator that we are exiting the current limbo of flat freight volumes. As it appears this series has finally found its nadir, it will likely take a few more months for production to rise significantly (e.g., late Q1 2025). #supplychain #supplychainmanagement #freight #trucking #manufacturing 

AI agents and physical AI are shifting industrial automation from equipment supply to autonomous, self-optimizing systems. The most mature vendors are moving from pilots to production, with robots navigating complex environments and digital twins optimizing the value chain. This CB Insights brief gives a good view of where the top 20 industrial automation companies stand on AI maturity. Three key trends. 1. Leaders like Siemens Industry and ABB are linking AI systems across design, logistics, manufacturing, and maintenance creating compounding benefits. 2. Optimization dominates near-term priorities, while digital twins are emerging as the backbone for connecting hardware and software. 3. Partnerships with tech companies like Microsoft, Google, and Nvidia are essential, but they create new dependencies that must be managed. Siemens at the top of the ranking, combining copilots, edge platforms, and digital twins. Its work with Microsoft and Nvidia expands capabilities but increases reliance on external tech. Honeywell takes a more focused approach, embedding AI into devices and workflows. Its Qualcomm partnership highlights product-level integration over broad system building. ABB advances through its OmniCore platform and acquisitions such as Sevensense and SensorFact, blending robotics, software, and energy management. Schneider Electric pushes AI in energy management, using digital twins and partnerships with Nvidia, Microsoft, and Itron to extend from factory optimization into grid intelligence. The path forward in industrial AI is moving beyond pilots or isolated tools. It will depend on how well vendors embed AI into their platforms, link technologies across domains, and balance the benefits of external partners with the need for strategic independence. Those that will get it right will turn AI from experimentation into durable advantage. Just as critical is how their customers adopt these technologies. Industrial firms must shift from isolated use cases to embedding AI in design, production, energy, and logistics. Success requires not only advanced tools, but also the data, skills, and processes to make AI scale in complex operations.

The latest manufacturing data across Asia reflects a paradox that leaders should not ignore. Production is rising, but not purely because of demand. It is being pulled forward by anxiety. The Middle East conflict has triggered a familiar pattern: supply chain uncertainty, rising commodity prices, and a surge in precautionary inventory building. In the short term, this creates the illusion of strength. Orders increase, factories accelerate output, and PMI readings edge upward. But beneath this, cost pressures are intensifying and sentiment is weakening. Energy, raw materials, and critical inputs have all become more expensive, disproportionately impacting economies deeply reliant on imports. What we are witnessing is not organic growth, it is defensive growth. There are early warning signs. Vietnam is already seeing a decline in new orders. Indonesia’s output has contracted. Even stronger economies like Japan and South Korea are navigating record cost burdens despite demand from AI and technology sectors. The key question is not what is happening now, but what happens when stockpiling fades. For business leaders, this is a moment to prioritise supply chain resilience, cost discipline, and scenario planning. Because when demand normalises, only structurally strong businesses will sustain momentum. #manufacturing #industry #manufacturers

As our President said yesterday: only what gets measured gets done . Let me share some insights from our DG GROW kitchen on how we observe and measure the #SingleMarketEconomy to build robust data for policy making. DG GROW is continuously working sourcing , processing and interpreting relevant information to better understand industrial trends and better anticipate potential risks or disruptions. Such data informs not only policy making but is relevant to planning and decisions for industry and other users. This summer, we’re making available two useful new tools: 1. 𝐒𝐂𝐀𝐍 𝐃𝐚𝐬𝐡𝐛𝐨𝐚𝐫𝐝 Powered by Eurostat COMEXT data, the SCAN Dashboard helps detect supply chain distress by identifying anomalous changes in import prices and quantities. Users can: - Examine all raw materials essential for Net Zero Techs (EV batteries, fuel cells, heat pumps, solar panels, wind turbines) and detect potential supply chain issues. - Select and analyse other products of interest. - View information in intuitive ‘quadrants’ with the top left indicating the highest distress. - Access detailed Product Charts on products showing import sources, price evolution, and more. Recent data reveals intriguing shifts in the EU's import patterns for solar panel materials. From February to April 2024, imports of gallium, molybdenum, boron, and copper decreased compared to 2021-2023, while prices rose. These materials, except gallium, are also vital for wind turbine technologies. The Dashboard indicates potential supply chain distress for these materials, proving invaluable for industry experts. 2. 𝐈𝐧𝐝𝐮𝐬𝐭𝐫𝐢𝐚𝐥 𝐏𝐫𝐨𝐝𝐮𝐜𝐭𝐢𝐨𝐧 𝐃𝐚𝐬𝐡𝐛𝐨𝐚𝐫𝐝 The Industrial Production Dashboard enables users to explore manufacturing output trends in major EU producer countries and key sectors (automotive, machinery, chemicals, fabricated metals, food) using Eurostat’s Industrial Production Index (IPI). This tool offers: - A clear view of the EU’s industrial performance through price-adjusted output. - Insights into production trends across various sectors and regions. - Intuitive clustering of countries for comparative analysis, displaying maximum and minimum scores per group. The latest data highlights a decline in automotive production in Germany, France and Italy, while Eastern Europe experiences a boom. The machinery sector remains stable overall, despite varying performances across countries, and the chemicals industry is showing signs of recovery. These new Dashboards are designed to support the monitoring of industrial activity and are complementary to our confidence indicators and producer price inflation analysis. SCAN Dashboard 👉 https://lnkd.in/eBMRSHa7 Industrial Production Dashboard 👉 https://lnkd.in/eTH5Mvji Confidence Indicator for ecosystems 👉 https://europa.eu/!whVqnv Decomposition of producer price inflation in the Euro area 👉 https://europa.eu/!dkVqTT

2026 will be the “operational AI + software-defined automation” year in industrial automation. After years of pilots, we’re moving into a phase where AI is expected to deliver measurable ROI on the shop floor: higher OEE, fewer unplanned stops, faster changeovers, and more resilient supply chains. Here are the trends I’m betting on for 2026 — with numbers: 1) Industrial automation keeps growing (and AI is one of the key accelerators) Global industrial automation is projected to reach ~$233.6B in 2026 (up from ~$215.2B in 2025) and is forecasted to more than double over the next decade. 2) Robotics stays the #1 “hard ROI” segment The world installed ~553,000 industrial robots in 2022 (a record pace) and the installed base is already around ~4 million robots globally. In 2026, I expect growth to shift even more toward: cobots (low barrier deployment) AMRs/AGVs (warehouse + intralogistics automation) “physical AI” capabilities (vision + autonomy + safer human collaboration) 3) AI moves from dashboards to decisions (Agentic AI in OT) 2026 is where we’ll see AI transition from “analytics” to actionable, semi-autonomous decision support: predictive maintenance that triggers workflows quality inspection with closed-loop parameter tuning energy optimization that reacts to tariffs and load supply chain agents that detect risk early and propose mitigation This is also directly tied to the IT/OT convergence wave: AI needs clean, contextualized, real-time data to work. 4) Virtual PLC / SoftPLC: the first real “software-defined control” chapter Virtual PLC is still early, but the growth rate is the signal: The Virtual PLC / SoftPLC market is estimated ~ $1.19B in 2026, with long-term forecasts showing ~13% CAGR over the following years. Why this matters: it’s not “just PLC in a VM.” It’s a different operating model: faster deployment & updates easier scaling (instances, redundancy, orchestration) tighter integration with edge compute + industrial AI pipelines more portable automation stacks (less vendor lock-in over time) 5) SCADA/HMI evolves into an industrial data platform SCADA is expected to keep a strong trajectory, with the market projected around ~$13.1B in 2026 and continuing double-digit growth in the years ahead. In practice, SCADA/HMI becomes the “context layer” for AI: tags + events + historian + alarms + workflows. My 2026 “winners” in industrial automation! If I had to pick the branches that will outperform in 2026: - Robotics + intralogistics automation (AMRs, conveyors, picking, palletizing) - Industrial AI for maintenance + quality (fastest ROI use cases) - Edge computing + Virtual PLC ecosystems (software-defined control) - Cybersecurity for OT (because connectivity keeps rising) Are you investing more in AI on the edge, or in Virtual PLC / software-defined architectures? #IndustrialAutomation #Industry40 #IndustrialAI #VirtualPLC #SoftPLC #SCADA #Robotics #IIoT #EdgeComputing #OTSecurity

Improvement Community: Manufacturing Trends (March Roundup) The Institute for Supply Management March 2026 Manufacturing PMI report signals continued expansion in the U.S. manufacturing sector, with the PMI rising to approximately 52.7—its strongest level since 2022. This marks multiple consecutive months above the 50 threshold, indicating sustained, though modest, growth. However, the composition of that growth reveals underlying instability. A key driver of the PMI increase was a sharp rise in supplier delivery times, which paradoxically boosts the index but reflects worsening supply chain disruptions rather than true demand strength. These delays are tied to geopolitical tensions and logistics constraints, signaling fragility in global supply networks. At the same time, inflationary pressures intensified significantly. The Prices Paid Index surged to its highest level since mid-2022, driven by rising energy costs, tariffs, and material shortages. This creates a challenging environment where manufacturers must balance cost increases with pricing strategies and margin protection. Demand signals were mixed. While production and some new orders remained in expansion territory, forward-looking indicators such as order backlogs and employment weakened. Manufacturing employment continued to contract, suggesting companies remain cautious about long-term demand stability. Overall, the report highlights a manufacturing sector caught in a tension between growth and disruption—expanding on paper, but constrained by cost pressures, supply chain inefficiencies, and macroeconomic uncertainty. The data reinforces that current expansion is not yet indicative of a fully healthy or resilient industrial base, but rather a system still recalibrating in a volatile global environment. Five Key Insights 💠 Growth ≠ Strength PMI expansion is being driven partly by supply delays—not purely demand—masking underlying weakness. 💠 Inflation Is Re-Accelerating Input costs are rising sharply, signaling renewed pressure on margins and pricing strategies. 💠 Supply Chains Remain Fragile Delivery delays highlight ongoing geopolitical and logistics disruptions impacting operations. 💠 Labor Hesitation Signals Uncertainty Continued contraction in manufacturing employment reflects cautious outlooks from leadership. 💠 Forward Demand Is Softening Weakening backlog and new order trends suggest potential slowing in future production cycles. Question Is our current definition of “efficiency” unintentionally creating waste elsewhere in the system? Full Article Link https://lnkd.in/ewKwHZ5M

𝗧𝗵𝗲 𝗕𝗮𝗰𝗸𝗯𝗼𝗻𝗲 𝗼𝗳 𝗜𝗻𝗱𝗶𝗮’𝘀 𝗜𝗻𝗱𝘂𝘀𝘁𝗿𝗶𝗮𝗹 𝗚𝗿𝗼𝘄𝘁𝗵: 𝗨𝗻𝗱𝗲𝗿𝘀𝘁𝗮𝗻𝗱𝗶𝗻𝗴 𝘁𝗵𝗲 𝗜𝗻𝗱𝗲𝘅 𝗼𝗳 𝗘𝗶𝗴𝗵𝘁 𝗖𝗼𝗿𝗲 𝗜𝗻𝗱𝘂𝘀𝘁𝗿𝗶𝗲𝘀 (𝗜𝗖𝗜) 🏭 Let us understand how India’s industrial performance is measured? The Index of Eight Core Industries (ICI) is a key economic indicator that tracks the eight pillars of India’s industrial infrastructure: ⚡Coal | Natural Gas | Crude Oil | Refinery Products | Fertilizers | Steel | Cement | Electricity | The "Index of Eight Core Industries" (ICI) is a subset of the "Index of Industrial Production" (IIP). These industries account for 40.27% of India's industrial output (IIP), making ICI a crucial tool for policy decisions, economic forecasting, and investment planning. 🔍 𝗪𝗵𝘆 𝗗𝗼𝗲𝘀 𝗜𝗖𝗜 𝗠𝗮𝘁𝘁𝗲𝗿? 📊 Early Economic Signal: Released a month before the IIP, it helps gauge industrial momentum. 🏗 Industrial Growth Benchmark: Reflects GDP trends, employment patterns, and infrastructure expansion. 💰 Investment & Policy Planning: Helps shape interest rates, sectoral policies, and business strategies. ⚙️ Energy & Infrastructure Development: Serves as a guide for the long-term planning in construction, power, and transportation. 🌍 Global Competitiveness: Impacts trade balance, cost of production, and India's global standing. 📊 𝗛𝗼𝘄 𝗶𝘀 𝘁𝗵𝗲 𝗜𝗖𝗜 𝗖𝗼𝗺𝗽𝘂𝘁𝗲𝗱? ✅ Base Year: 2011-12 (aligned with national income accounts). ✅ Formula: Laspeyres’ fixed-base formula, with each industry weighted by its economic contribution. ✅ Data Sources: Six government agencies ensure transparency and reliability. 📈 𝗧𝗿𝗲𝗻𝗱𝘀 & 𝗣𝗼𝗹𝗶𝗰𝘆 𝗜𝗺𝗽𝗹𝗶𝗰𝗮𝘁𝗶𝗼𝗻𝘀: 🔹 Growth in Core Sectors: Electricity, steel, and refinery output are rising, indicating industrial expansion and higher energy demand. 📌 National Electricity Plan (2022-32): Aims for >900 GW installed capacity by 2031-32. 📌 National Steel Policy (2017): Targets 160 kg per capita steel consumption by 2030-31. 🔸 Challenges in Crude Oil & Natural Gas: Weak performance here raises energy security concerns and increases import dependency. 🔹 Proactive Interventions: ✅ PLI schemes and viability gap funding (VGF) are pushing clean/green energy and infrastructure growth. 🚀 𝗥𝗲𝗰𝗲𝗻𝘁 (𝗗𝗲𝗰𝗲𝗺𝗯𝗲𝗿 𝟮𝟬𝟮𝟰) 𝗣𝗲𝗿𝗳𝗼𝗿𝗺𝗮𝗻𝗰𝗲: ✅ ICI grew 4.0% YoY, signalling strong industrial activity. 📈 Growth in Coal, Electricity, Steel, Cement, Refinery Products, Fertilizers, and Crude Oil. 📉 Natural Gas was the only sector to decline. 𝗘. 𝗜𝗻𝗳𝗲𝗿𝗲𝗻𝗰𝗲: The ICI serves as a barometer for India's industrial strength. A 4% growth in December 2024 points to a positive economic outlook. However, sustaining this momentum will require strategic investments in infrastructure, clean energy, and core industries. 📢 Your thoughts on India’s industrial growth? Let’s discuss! AI Assisted.

🏭 Industrial production grew 0.5% in January after December and November data were revised lower. Production hit the highest level since September 2022, beating expectations. Compared to a year ago, industrial production is up 2%, the largest jump in more than two years. Below-average temperatures in much of the South and Midwest in January spurred increased energy usage; record-breaking cold and snow hit the Gulf Coast. The index for energy materials hit the highest level on record going back to the 1950s. Utilities production jumped 7.2% last month, the largest increase since March 2017. It is not just cold weather effects. Energy needs by businesses are increasing, especially as businesses pivot to adopt generative AI. Mining production fell 1.2% in January but was still 3.4% higher than a year ago. Oil and gas extraction, along with coal mining, fell while metal ore mining gained. Gold prices keep hitting new records. Drilling oil and gas wells fell to the lowest level since September 2021. A ban on liquified natural gas exports made by the former administration exactly one year ago was lifted by the new administration on Inauguration Day. Natural gas liquid extraction fell in the month, but the overall trend has been growing for decades. Manufacturing output slumped 0.1% in January as both durable and nondurable goods production underperformed. Vehicle production fell to the lowest level in three years while computers and electronics production helped offset some of that drop. A resumption of work at a major aerospace producer in November took two months to show up in aerospace transportation production data, which reached the highest level since August 2024. Food manufacturing was lower, which showed up in higher food inflation readings in January; the bird flu has been wreaking havoc on egg prices. Higher-for-longer mortgage rates have frozen the housing market and as a consequence, demand for furniture and appliances. Furniture manufacturing remains near the lows last seen in the early 1980s (excluding Covid-era plant shutdowns), when mortgage rates were in the double digits. Capacity utilization rose 1.2% due entirely to utilities. Manufacturing and mining both declined. A strong dollar and sluggish growth abroad spell less demand for US-made goods for the year. Add on tariffs and retaliatory measures by our trading partners, and the outlook is unfavorable. The silver lining is that higher-end goods such as chips manufacturing will provide a tailwind along with the energy needs due to power-hungry data centers. Trade uncertainty weighs heavily on the sector. #manufacturing #industrialpolicy #utilities #tariffs Read more: https://lnkd.in/gHYfpbuT

After falling in three of the four prior months, manufacturing production grew 0.5% in July. Durable and nondurable goods production increased 0.8% and 0.1% in July, respectively. Since April 2022, when manufacturing production reached its highest level since the end of 2018, output in the sector has pulled back 1.3% on weaker global growth and ongoing geopolitical and economic uncertainties. The current forecast is for manufacturing production to decline 0.3% in 2023 but expand 1.0% in 2024.   At the same time, manufacturing capacity utilization rose from 77.5% in June to 77.8% in July. This figure has trended higher year to date, up from 77.1% in December, but it remains lower than the rates seen in March 2022 and April 2022 (79.9%), which was the highest since July 2000.   July’s report included mixed results for manufacturing production data. Sectors with increased output for the month included motor vehicles and parts (up 5.2%), textiles and products (up 3.1%), machinery (up 1.3%), other manufacturing (up 1.3%), petroleum and coal products (up 1.1%) and computer and electronic products (up 1.0%), among others.   At the other end of the spectrum, electrical equipment and appliances (down 1.7%), furniture and related products (down 1.2%), primary metals (down 1.2%), wood products (down 0.7%) and paper (down 0.7%) had the largest reductions in production in July.     There were five sectors with growth in manufacturing production over past 12 months: motor vehicles and parts (up 10.3%), petroleum and coal products (up 2.8%), computer and electronic products (up 2.4%), chemicals (up 1.4%) and aerospace and miscellaneous transportation equipment (up 1.1%).   Meanwhile, total industrial production rose 1.0% in July, rebounding from decreases in both May and June. Mining and utilities production increased 0.5% and 5.4% for the month, respectively. On a year-over-year basis, industrial production has decreased 0.2%. Total capacity utilization improved from 78.6% in June to 79.3% in July.  #mfg #manufacturing #production #capacity #economy #outlook https://lnkd.in/giXCfEWE