WRAPUP 1-Canada industry capacity use up more than foreseen

* Q3 capacity use rises to 78.1 pct from 76.9 pct

* Rate is highest since Q3 2008, below peak in 2007

* Manufacturing sector main driver of gains

* Household net worth rebounds, debt levels hit high

By Louise Egan

OTTAWA, Dec 13 (BestGrowthStock) – Strong demand for vehicles and
other manufactured goods allowed Canadian companies to use more
industrial capacity than expected in the third quarter,
suggesting they are learning to cope with the impact of a
stronger domestic currency.

Capacity utilization rose a two-year high 78.1 percent, up
for a fifth consecutive quarter and rising from 76.9 percent
rate in the second quarter, Statistics Canada on Monday. The
agency revised the estimate for the second quarter up from 76
percent.

The gain of 1.2 percentage points was smaller than in the
previous three quarters but still exceeded a market forecast
that industry would operate at just 76.5 percent of its
potential output in the period. The rate peaked in the first
quarter of 2007.

The manufacturing sector, battered by the strong Canadian
dollar and weak demand in the U.S. market, drove most of the
gains, Statscan said. The sector’s capacity use rate jumped to
to 81.2 percent from a revised 78.7 percent in the previous
quarter.

The data helped push the Canadian dollar as high as
C$1.0028 to the U.S. dollar, or 99.72 U.S. cents, on Monday
morning, its highest point since Dec. 7. [CAD/]

Capacity use at factories making transportation equipment,
including cars, rose to 74.3 percent from 70.3 percent in the
second quarter. Machinery makers ran at 85.4 percent capacity,
the third-highest level on record.

Overall, 15 of 21 major manufacturing industries posted
gains. In the non-manufacturing sector, only forestry and
logging registered a significant gain, while other industries
showed modest ups or downs.

“Today’s report underlines the fact that even under the
conditions of a rather austere economic recovery in which
growth rates are characterized at best as incremental, even
restricted rates of GDP growth will continue to chip away at
the output gap,” said HSBC Securities economist Stewart Hall in
a note to clients.

“From a monetary policy standpoint, there is room to
suggest that the output gap may be closing faster than the
(Bank of Canada) estimated in its economic update from
October.”

Other data on Monday showed the country’s net worth edged
up 0.7 percent to C$6.3 trillion ($6.3 trillion) in the third
quarter, while household net worth advanced 2.7 percent to
C$6.1 trillion following a 0.5 decline in the second quarter,
Statistics Canada reported.

Rallying stock markets helped make the gains in quarterly
household net worth the strongest in a year.

“The increase pushes Canadians’ net worth above the
pre-recession high seen in the second quarter of 2008,
indicating that households have now fully recovered the
cumulative C$552 billion of net worth that was lost during the
economic downturn,” RBC Capital Markets economist David
Onyett-Jeffries said in a note to clients.

The gains, however, were tempered by a spike in the ratio
of consumer debt to disposable income to 148.1 percent, a
record high, HSBC’s Hall said.

($1=$1.00 Canadian)
(With files from Claire Sibonney in Toronto; editing by Peter
Galloway)

WRAPUP 1-Canada industry capacity use up more than foreseen