Industrial agglomeration in cities affects innovation differently depending on whether it's manufacturing or producer services. A study in China found that manufacturing agglomeration has a threshold effect on urban innovation, while producer service agglomeration does not. Additionally, the two types of agglomerations have opposite indirect effects on innovation. The spillover effect of industrial agglomeration can be limited by the absorptive capacity of nearby cities. These findings help clarify the debate on the impact of industrial agglomeration on urban innovation and have important implications for urban development policies.