U.S. industrial output posted its sharpest drop in more than a year in October, the Federal Reserve said Friday, stoking worries about the health of the nation's embattled factory sector.

The Fed said October's larger-than-expected 0.8 percent decline was the largest since a 1.1 percent drop seen in September 2001. Manufacturing output, which accounts for the largest portion of total industrial production, slid 0.7 percent. Mining output fell 1.0 percent, hurt by stormy weather that disrupted Gulf Coast oil production. Utilities output also fell by 1.6 percent.

Capacity at the nation's manufacturing plants, mines and utilities also fell in October, dipping to 75.2 percent, the lowest since March. Factory capacity in use stood at its lowest since February, 73.5 percent.

Prior to the report's release, analysts polled by Reuters had expected output to dip by a smaller 0.3 percent and capacity utilization to be a higher 75.6 percent.