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(CEP News) Ottawa - Capacity utilization by Canadian industries fell for a fourth straight quarter to its lowest level in 16 years as the U.S. economic slowdown crimped demand for Canadian exports, Statistics Canada reported Friday.
Industries operated at 78.9% of their capacity in the second quarter of 2008, the statistical agency said. The last time capacity utilization was this low was in the third quarter of 1992 when utilization hit 78.6%. Economists had been expecting capacity utilization to drop from the first quarter, but only to 79.5% from a previously reported first quarter rate of 79.8%. Statistics Canada revised its first quarter gauge of capacity utilization to 79.6%. Although the second quarter hit a 16-year low, Statistics Canada noted the quarterly decline was less pronounced than the declines of the previous two quarters. Manufacturers reduced their production capacity to 76.7% in the second quarter from 77.2% in the previous quarter. Transportation equipment, wood products and plastic and rubber products all played a "large part" in the reduction. Transportation equipment capacity utilization fell 2.4 points to 74.5%, pushed down by sliding U.S. demand for automobile products. Similarly, wood product manufacturers chopped their use of production capacity to 65.0% from 66.8% because of weak U.S. demand. Statistics Canada noted the wood industry's rate was at its lowest since 1991 when the utilization rate hit 62.1% Plastic and rubber products manufacturers' utilization melted to 63.9% from 66.9% thanks in part to lower output of automobile parts. Strong results by machinery manufacturers and petroleum and coal products helped to mitigate the decline in capacity utilization in other areas, Statistics Canada said. Machinery manufacturers boosted their utilization 4.0 points from the previous quarter to 84.5%, while petroleum and coal products manufacturers upped their capacity utilization 5.2 points to 82.9%. By Sean McKibbon,
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