Industrial output rebounds on utilities

WASHINGTON (Reuters) - Industrial production unexpectedly rebounded in March as utilities increased output to cope with colder weather, making up for weak manufacturing growth hobbled by a major auto parts strike, a Federal Reserve report showed on Wednesday.

Total industrial output rose 0.3 percent in March after a downwardly revised drop of 0.7 percent in February. Wall Street economists had forecast a March output drop of 0.1 percent after February's previously reported 0.5 percent fall.

Utility output rose 1.9 percent in March after a 3.6 percent drop in February, while manufacturing output rose 0.1 percent after a 0.5 percent fall in February.

"Factory output was held down by a large decline in the output of motor vehicles and parts. A shortage of motor vehicle parts that resulted from a strike at a parts manufacturer idled a number of motor vehicle assembly plants," the Fed said in the report, referring to the seven-week-old walkout at American Axle & Manufacturing Holdings (AXL.N).

The strike, which has partly or completely idled some 30 U.S. auto plants, caused motor vehicle and parts output to fall 5.4 percent in March after a 1.3 percent fall in February.

Excluding motor vehicles and parts, manufacturing production rose 0.4 percent after a 0.6 percent fall in February.

Mining production role 0.9 percent after a 0.3 percent fall in February.

The capacity utilization rate, a gauge of how busy the nation's industry were, edged higher to 80.5 percent from 80.3 percent in February. The March rate was just above economists forecast for a rate of 80.3 percent.

In manufacturing, the capacity use rate was 78.5 percent, the lowest since September 2005, compared to 78.6 percent in February.

(Reporting by David Lawder; Editing by Neil Stempleman)