WASHINGTON (Reuters) - Production at U.S. factories increased solidly in March as output at motor vehicle assembly plants and elsewhere rose, suggesting that manufacturing was turning the corner after being constrained by higher borrowing costs.

Manufacturing output rose 0.5% last month after an upwardly revised 1.2% rebound in the prior month, the Federal Reserve said on Tuesday. Factory output was previously reported to have rebounded 0.8% in February. Economists polled by Reuters had forecast factory output rising 0.3%.

Production at factories increased 0.8% year-on-year in March. It edged down at a 0.1% annualized rate in the first quarter after contracting at a 0.9% pace in the October-December quarter.

Manufacturing accounts for 10.4% of the economy. A survey from the Institute for Supply Management early this month showed manufacturing grew for the first time in 1-1/2 years in March.

But with the Federal Reserve expected to delay an anticipated rate cut this year amid stubbornly high inflation, manufacturing is not out of the woods yet.

Motor vehicle and parts output increased 3.1% last month after advancing 3.4% in February. Durable goods manufacturing production rose 0.3%. There were significant increases in the output of aerospace and miscellaneous transportation equipment, and wood products. But output of nonmetallic mineral products, furniture as well as primary metals declined.

Production of nondurable goods rose 0.7% as gains in the output of petroleum and coal products and chemicals offset declines food, beverage and tobacco products.

Mining output dropped 1.4% after rebounding 3.0% in February. Utilities production rose 2.0% after decreasing 7.6% in February. Overall industrial production rose 0.4% in March after rising by the same margin in February.

Industrial production was unchanged year-on-year in March. It contracted at a 1.8% pace in the January-March quarter after shrinking at a 1.9% rate in the fourth quarter.

Capacity utilization for the industrial sector, a measure of how fully firms are using their resources, rose to 78.4% from 78.2% in February. It is 1.2 percentage points below its 1972-2023 average.

The operating rate for the manufacturing sector increased 0.3 percentage point in March to 77.4%. It is 0.8 percentage points below its long-run average.