The government today said industrial output increased 0.7% in March – marking the manufacturing sector's best showing in about two years.

The Federal Reserve said the increase in overall production at the nation's factories, mines and utilities is the biggest gain since May 2000. Factory output, which makes up the largest proportion of total output, gained 0.8%, its strongest performance since a 0.9% jump in March 2000.

The amount of capacity that firms are using also climbed last month, rising 0.5% to 75.4%. The percentage of capacity being used was the highest since September of last year, the Fed said.

According to the data, manufacturing is getting stronger as businesses ramp production up to meet demand. The March gain in overall output was the third straight one.

Evidence that manufacturing is climbing has been seen in trucking: Both Peterbilt Motors Co. and Volvo Trucks North America Inc. recently announced they have ramped up production.

Wall Street analysts had anticipated a weaker rebound in the March production data.