The U.S. central bank said its overall industrial production index fell 0.3 % last month after a downwardly revised 0.6 % gain in December.
Economists polled by Reuters had forecast industrial production being flat in January. December's output was originally reported as a 0.8 % rise. The Fed's measure of the industrial sector comprises manufacturing, mining, and electric and gas utilities.
The bulk of the January decline was due to a 5.7 % drop in utilities output because of reduced heating demand.
Manufacturing production was up 0.2 %, matching analysts' forecasts, while mining output rose 2.8 %.
With overall output declining in January, the %age of industrial capacity in use fell 0.3 %age point during the month to 75.3 %. Manufacturing capacity use rose 0.1 percentage point to 75.1 %.
Fed officials look to capacity use as a signal for how much further the economy can accelerate before sparking higher inflation.