U.S. factory production unexpectedly increased in August amid a rebound in the output of motor vehicles and some nondurable goods, though tariffs continued to cast a shadow over the manufacturing sector.

Manufacturing output rose 0.2% last month after a downwardly revised 0.1% fall in July, the Federal Reserve said on Tuesday. Economists polled by Reuters had forecast production for the sector, which accounts for 10.2% of the economy, would slip 0.2% following a previously reported unchanged reading in July.

Production at factories increased 0.9% on a year-over-year basis in August.

President Donald Trump’s tariffs, ranging from a 50% duty on steel and aluminum to a 25% tax on motor vehicles and parts, have weighed on some segments of manufacturing, but others have been boosted by a boom in spending on artificial intelligence.

Trump has defended the duties as necessary to revive a long-declining U.S. industrial base, though economists argue that effort cannot be accomplished in a short period of time, citing high production and labor costs as among the challenges.

Motor vehicle and parts production rebounded 2.6% last month after declining 0.7% in July. But output of fabricated metal products and machinery decreased. Durable manufacturing production increased 0.2% after gaining 0.3% in July.

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