(REUTERS) -- Industrial output was unexpectedly flat in January as steep declines in mining and utilities offset gains in manufacturing, a Federal Reserve report showed on Wednesday.

The Fed revised December's industrial output to show a solid 1.0 percent increase instead of the previously reported 0.4 percent gain, pointing to underlying strength in the economy.

Economists polled by Reuters had expected industrial production to increase 0.7 percent last month .

Unseasonably warm winter weather saw utilities output plunging 2.5 percent after a 2.4 percent decline the prior month. Mining production fell 1.8 percent after rising 0.9 percent.

Manufacturing advanced 0.7 percent after increasing by an upwardly revised 1.5 percent in December. That was previously reported as a 0.9 percent gain. Motor vehicle production jumped 6.8 percent after increasing 3.8 percent in December.

Capacity utilization, a measure of how fully firms are using their resources, fell to 78.5 percent from 78.6 percent the prior month. That was 1.8 percentage points below the 1972-to-2011 average.

Analysts were expecting capacity use to rise to 78.6 percent. Capacity use in manufacturing rose to 77.00 percent.

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

(Reporting By Lucia Mutikani; Editing by Theodore d'Afflisio)

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