Canada Industrial Capacity Utilization Rate Climbs to 83.3% in 1Q

By Paul Vieira Features Dow Jones Newswires

Canada's industrial capacity utilization rate rose in the first quarter to its highest level in the post-crisis era, in a sign the economy is gradually absorbing slack that's kept a lid on inflationary pressure.

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Overall, industries in Canada operated at 83.3% of their production capacity in the first quarter, a 1.5-percentage-point increase from a revised 81.8% level in the previous three-month period, Statistics Canada said Friday. Market expectations were for a utilization rate of 83.5%, according to economists at Royal Bank of Canada. Manufacturing was the main driver pushing the utilization rate higher.

The rate represents a ratio of industry's actual output to its estimated potential output. It's also a gauge of how much slack, or spare capacity, there is in the economy.

The first-quarter results mean companies are operating at their highest rate of capacity since the third quarter of 2007, or when the first signs of the 2008-09 global financial crisis began to emerge.

The Bank of Canada has kept its benchmark interest rate unchanged, at 0.50%, amid better economic data due in part to what it perceives as excess capacity in the economy. The central bank's main gauges of underlying, or core, inflation have all in recent months been below 2% -- or the level of annual inflation the Bank of Canada targets when setting interest rates.

Statistics Canada said last week Canada's gross domestic product rose 3.7% annualized in the first three months of 2017, positioning the country as the best performing economy among the Group of Seven nations.

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Write to Paul Vieira at paul.vieira@wsj.com

(END) Dow Jones Newswires

June 09, 2017 08:45 ET (12:45 GMT)