Industrial output gain biggest in nearly two years

Chevrolet Cruze chassis move along the assembly line at the General Motors Cruze assembly plant in Lordstown, Ohio July 22, 2011.

WASHINGTON (Reuters) - Industrial output rose more than expected in November, posting its sharpest increase in nearly two years, as production bounced back from the disruptions of superstorm Sandy.

Industrial production expanded 1.1 percent last month after a revised 0.7 percent fall in October, the Federal Reserve said on Friday.

That was the steepest increase since December 2010. Analysts polled by Reuters had expected output to gain by 0.3 percent last month, after October's previously reported 0.4 percent drop.

The Fed said production was driven by recovery in industries hurt by the storm, which tore through the East Coast at the end of October, as well as a rise in vehicle output.

Manufacturing output expanded 1.1 percent after dropping 1 percent the previous month, though production still hovered below levels reached earlier this year.

Industrial production encompasses output from manufacturing, utilities and mining operations, including oil and natural gas production.

Production at utilities gained 1 percent in November, while mining output increased 0.8 percent.

Capacity utilization, a measure of how fully firms are using their resources, rose to 78.4 percent in November from 77.7 percent in October. Economists had expected capacity use to reach only 78.0 percent.

(Reporting by Anna Yukhananov; Editing by Tim Ahmann and James Dalgleish)