Industrial Production Unexpectedly Falls 0.5%

U.S. industrial production unexpectedly fell in October, logging a 0.5 percent decrease, as output shrank at factories, mines and utilities, a Federal Reserve report on Friday showed.

Separately, another government report showed U.S. net capital outflows moderated in September as foreign purchases of long-term securities rebounded sharply from the previous month's sell-off.

Friday's report marked the biggest decline in industrial output since a matching drop in January and was driven, in part, by a 1.6 percent decrease in utilities output during milder weather that month.

Economists surveyed ahead of the report were expecting total output to increase 0.1 percent in October. Output in September was revised up to a 0.2 percent increase from an initially reported 0.1 percent rise.

Manufacturing output was down 0.4 percent after a 0.2 percent gain in September.

October capacity utilization dropped to 81.7 percent from 82.2 percent. That was slightly below the 82 percent economists were expecting.

Motor vehicles and parts production was down 1.0 percent in October after a 3.0 percent drop in September.

Meanwhile, net capital outflows amounted to $14.7 billion compared to August's revised outflow of $150.7 billion, the Treasury Department said.

The slowdown in the outflow came as international investors bought a net of $26.4 billion in long-term U.S. securities, after selling $70.6 billion in August.

This compared with economists' expectations for an inflow of $70 billion in September.

"The consensus was too high given the 3.8 percent drop in the dollar index in September. We are still a bearish U.S. dollar market," said David Watt, senior currency strategist at RBC Capital Markets in Toronto.

The dollar moved little on the data, with the euro last trading up 0.3 percent at $1.4667 .

China, the second biggest holder of U.S. Treasuries, reduced its holdings to $396.7 billion versus $400.2 billion in August, the report showed.