Industrial production dropped by just 0.1 percent in January, its best performance in six months, the Federal Reserve said Friday in a report that offered some hints of stabilization in the hard-hit manufacturing sector.

The tiny decline came after output at the nation's factories, mines and utilities dropped by 0.3 percent in December. The 0.1 percent decrease was slightly smaller than many analysts expected and marked the best performance in industrial production since July, when output rose by 0.1 percent.

Capacity in use fell to 74.2 percent, the lowest level since April 1983.

After decreases in 14 of the last 15 months, factory output was unchanged in January. A substantial rebound in steel production was one of the factors preventing another drop in manufacturing production, the Fed said.

The latest snapshot of industrial activity is consistent with other recent reports suggesting that manufacturers may be turning a corner. The Institute for Supply Management reported stronger manufacturing activity in January and government reports have shown that factories are seeing more demand for big-ticket goods.

The Associated Press contributed to this report.