Manufacturing production capacity utilization at 15-year low

In the third quarter of 2008, Canadian industries reduced their use of production capacity for a fifth straight quarter, according to new data from Statistics Canada. A majority of sectors, especially the automobile and construction sectors, contributed to the downturn in Q3.

In the manufacturing sector, industries used 78 per cent of their production in Q3, the lowest level in 15 years. This was a decline from 78.2 per cent in the second quarter.

Although 14 of the 21 major groups in the manufacturing sector increased capacity use, it was not enough to offset declines in four groups: transportation equipment; fabricated metal products; plastics and rubber products; and petroleum and coal products manufacturing.

A slowdown in both domestic and foreign demand for automobile products was a major contributor to a 2.9 per cent decline in production in the transportation equipment manufacturing industry.

Additionally, slower demand for automobile products also had a negative impact on the production of tires and plastic parts for vehicles, fueling a 1.3 per cent decline in output in the plastics and rubber manufacturing industries. As a result, industrial capacity utilization rates fell to 65.3 per cent, the lowest rate ever posted by this industry.