Industrial production falls on weak manufacturing

Industrial production unexpectedly fell in January, weighed down by weak manufacturing and mining, according to a report on Friday that was another sign of slow economic activity at the start of the year.

Industrial production dipped 0.1 percent last month after a revised 0.4 percent gain in December, the Federal Reserve said.

Economists polled by Reuters had expected industrial output to rise 0.2 percent in January. The report comes on the heels of data this week showing retail sales growth slowed in January as households adjusted to higher taxes.

Output last month was pushed down by a 0.4 percent drop in manufacturing production, which reflected a 3.2 percent decline in motor vehicle assembly. Manufacturing output had increased 1.1 percent in December.

Production at the nation's mines fell 1.0 percent.

With industrial output weak, the amount of capacity in use fell to 79.1 percent from 79.3 percent in December.

Industrial capacity utilization - a measure of how fully firms are using their resources - was 1.1 percentage points below its long-run average.

Officials at the Fed tend to look at utilization measures as a signal of how much "slack" remains in the economy, and how much room growth has to run before it becomes inflationary.

(Reporting By Lucia Mutikani; Editing by Chizu Nomiyama)