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Industrial capacity utilization rates drop to lowest level in more than 10 years

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by Daily Commercial News

Canadian industries reduced their use of production capacity in the fourth quarter, with the utilization rate falling to its lowest level in more than 10 years.

Fourth-quarter 2007 and 2007 Annual Figures

Canadian industries reduced their use of production capacity in the fourth quarter, with the utilization rate falling to its lowest level in more than 10 years. Industries operated at 81.8% of their capacity in the fourth quarter, down from 83.4% in the third quarter. The current rate is well below the most recent high of 87.1% reached in the fourth quarter of 2000.

In the construction sector, which accounts for 21.0% of total production, growth in production capacity remained higher than production output, while capacity utilization posted its fourth straight quarterly decrease. The rate fell from 86.5% to 85.5%.

The manufacturing sector, however, continues to be hard hit by the appreciation of the Canadian dollar.

In 2007, the annual average rate in the manufacturing sector was 82.2% compared with 82.8% in 2006. The strong results posted in the first six months of 2007 were insufficient to offset production cutbacks in the second half of the year.

Manufacturing and construction sectors

Manufacturers appeared worried about the outlook for production for the first quarter of 2008 and, according to the January 2008 Business Conditions Survey, expect to reduce production in the first three months of 2008.

Manufacturers reduced their production capacity utilization for a second straight quarter, operating at 80.3%. this figure is down from 82.4% in the third quarter. Of the 21 major groups in the manufacturing sector, 18 reduced their industrial capacity utilization.

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