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.
Overall, 16 of Canada’s 21 manufacturing groups cut their capacity use. More than half the overall decline was caused by drops in three groups -- transportation equipment manufacturing, construction, and primary metal manufacturing.
The report “suggests that as consumer and export demand continue to wane, Canadian producers are increasingly retrenching activity, and slack is growing,” said TD Securities strategist Millan Mulraine.
Last month Bank of Canada Governor Mark Carney raised eyebrows by saying the Canadian economy would grow by 3.8 percent in 2010, although he said the forecast was subject to more doubt than usual.
Speaking on Saturday, he said that “many of the downside risks that we identified in our last monetary policy update are now materializing”.
The household wealth data showed Canadians took a hit to their pocketbooks even before the latest negative news. Statistics Canada said that on a per-capita basis, household net worth fell to C$165,300 ($130,200) in the fourth quarter, driven largely by the fall in stock markets.
The agency noted the S&P/TSX composite index dropped by 24 percent from the end of the third quarter, pushed lower by big declines in energy stocks.
It also noted that the decline was not as severe as in the United States, where household net worth fell by 9.0 percent in the fourth quarter.
“Our net worth is not shrinking as fast as the U.S. net worth largely because our house prices are not falling as fast as U.S. prices ... but it means less wealth this year for Canadians,” said Sal Guatieri, senior economist at BMO Capital Markets.
There are few signs that the economy is even starting to level out, much less start recovering.
Data for January’s manufacturing sales will be released on Tuesday, and analysts predict a 5.8 percent drop from December.
Additional reporting by Frank Pingue; Editing by Jeffrey Hodgson and Frank McGurty