Ottawa, Ontario, September 11, 2006--Canadian industries cut back their production capacity use in the second quarter to 85.5 percent, as expected, reflecting weaker foreign demand for Canadian exports and a slowdown in the housing market.
Statistics Canada said on Monday it was the third straight quarterly decline in the capacity utilization rate, which fell from 85.7 percent in the first quarter, revised down from 85.9 percent. Manufacturers' capacity use hit a two-year low of 83.1 percent.
Analysts surveyed by Reuters had correctly forecast the second-quarter rate, after a string of economic indicators had pointed to a cooling economy. The Bank of Canada suggested last week that the economy was returning to capacity sooner than expected, after running at just above capacity earlier this year.
"Most export-based industries and industries associated with the housing market reduced their capacity utilization in the second quarter," Statscan said in its report.
Wood products manufacturers were particularly hard-hit by a drop-off in demand, with capacity use tumbling to 81.1 percent from 85.5 percent in the first quarter and falling by 10.5 percentage points from the second quarter of 2005.
Despite tough times for Canadian car manufacturers, the transportation equipment sector actually increased its capacity use but Statscan attributed that to strength in the aerospace industry.
