Canada’s factory output hits record low
OTTAWA–Statistics Canada says the global recession idled a record level of Canada’s production capacity in the early months of 2009.
The agency says the rate of capacity utilization – the level of actual industrial output in comparison to potential – fell 5.6 percentage points in the first three months of 2009 from the previous quarter to 69.3 per cent.
That represents the first time since the agency began compiling the data in 1987 the rate has been below 70 per cent.
But economists with the Bank of Nova Scotia note that it likely was the lowest number since 1962, when the Bank of Canada began the series until Statistics Canada took over.
"Capacity utilization has hit bottom or is very close to doing so," wrote Scotia Capital economists in a note to clients, but added they expect activity to pick up soon.
"When auto-sector shut-downs reverse in (the second half of the year), look for capacity utilization to increase to at least the low-70s in a virtual heart beat how to get a free credit report."
Not surprisingly, the record low number came when Canada’s economy contracted by 5.8 per cent in the first quarter, the biggest retreat in overall economic activity since 1991.
The production drop was widespread and severe, the agency says, with 18 of 21 major industries registering declines..
Manufacturing lowered their use of production capacity by 7.8 points to 65.9 per cent; in the mining sector it fell to 55.3 per cent from 70.1 per cent, and the construction sector declined 3.5 points to 71.8 per cent.
The oil and gas extraction sector bucked the trend, rising 1.7 points to 78.6 per cent.
Filed under: economics by Fred