Canada industry, wealth data show sharp downturn

Mon Mar 16, 2009 1:29pm EDT
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By David Ljunggren

OTTAWA (Reuters) - Canadian industries ran at a slower rate than predicted and household wealth suffered its biggest drop on record in the last quarter of 2008, according to latest in a string of gloomy data showing the depth of the economy's downturn.

The capacity utilization rate -- the ratio of an industry's actual output to its potential output -- hit a record low of 74.7 percent in the last quarter, pulled down by weak domestic and foreign demand for manufactured goods, Statistics Canada said on Monday.

The rate was worse than the 75.3 percent predicted by analysts, who have often been too optimistic when forecasting how badly the economic crisis is affecting Canada.

Separately on Monday, Statscan said Canadian net household worth dropped by a record 4.4 percent in the fourth quarter of 2008, pushed down by the sharp decline in stock market prices. The drop was the largest since the agency began compiling the data in 1990.

The reports come after the government agency said on Friday that Canada lost 82,300 jobs, 30,000 more than expected, adding to evidence that the economy's slide may be more severe than many had thought.

Statscan said in its daily briefing on Monday that drop in the utilization rate was caused by "a significant cutback in production among the majority of manufacturers led to the overall reduction in capacity."

The fourth quarter rate was the worst since Statscan began tracking the data in 1987. The overall 2008 rate fell to a record low 77.8 percent from 82.1 percent in 2007.

The Canadian dollar weakened from overnight highs following the report, though analysts said factors including the risk appetite of global investors and oil prices were more important factors.   Continued...