Canada Industrial Capacity Use Hits Post-Crisis High in 2Q of 85%

By Paul Vieira Features Dow Jones Newswires

Canada's industrial capacity utilization rate hit a near 10-year high in the second quarter, with mining and the energy sector leading the way.

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Overall, industries in Canada operated at 85% of their production capacity in the second quarter, a 1.8-percentage-point increase from a slightly revised 83.2% level in the previous three-month period, Statistics Canada said Friday. The result for the second quarter matched market expectations, according to economists at Royal Bank of Canada.

The last time the capacity-utilization rate was higher than 85% was in the third quarter of 2007, or when the first signs of the financial crisis began to emerge.

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 data agency said this marks the second straight quarter the capacity-utilization rate exceeded the historical average of 83.1%.

The Bank of Canada this week raised its benchmark policy rate for the second time in nearly two months on the belief that spare capacity in the economy is being absorbed. The rate increases follows data suggesting the economy grew at a 4.5% annualized rate in the second quarter, and 3.7% on a year-over-year basis.

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

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(END) Dow Jones Newswires

September 08, 2017 08:45 ET (12:45 GMT)