Canadian industry sagging.

Paulb just sent in a link to this article in today’s Globe and Mail with the bad news that we’re producing a lot less than we could be.

Canadian industries cut back their use of production capacity to the lowest point in three years in the third quarter as demand for autos diminished and the residential construction market cooled.

Industries operated at 84.2 per cent of their capacity, marking the third straight quarterly decline and the first time since the third quarter of 2003 that the rate’s fallen below 85 per cent, Statistics Canada said Wednesday.

The report comes after a spate of gloomy news on the economic front. Canadian exports to the U.S. are falling and labour productivity has declined for the past two quarters. Bank of Canada Governor David Dodge said Monday that North American growth through to the first quarter will be weaker than he’d thought.

“Not a great picture on Canada in the third quarter,” said Stewart Hall, market strategist at HSBC Securities (Canada) in a note.

The Canadian dollar is dropping against the US dollar, which in turn is looking not-so-hot against the Euro. This could potentially help us with favorable export conditions, but:

“Gains in exports were not enough to offset the slowdown in demand for automotive products and the cooling residential construction market,” the report said.

So if you care about Canada and our economy it’s time to get out there and get shopping. It is the gift-giving season after all, so grab your credit cards and get buying. If you’re trying to figure out what to give me, I could use a new car.

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time2sell
time2sell
13 years ago

A low dollar doesnt lead to a housing crash, its a symptom of a weak economy. Right now our economy is going strong and prices are going down and stuff is staying on the market for longer. Where can we go from there? I suppose the economy could get stronger, wages could rise, interest rates could go down, but with whats happening in the US, the amount of new condos completing downtown in the next couple of years and current levels of unaffordability I'd say the downside looks a hell of a lot bigger than the upside over the next five years.

Warren
Warren
13 years ago

Just out of curiosity, explain to me how a low dollar leads to a housing crash.

Anonymous
Anonymous
13 years ago

I'm not too worried for thr morons that bought into this market. They're part of the problem and have been the reason why we have a ridiculous market. Oh I am already laughing….The slipping dollar is another factor that will ensure an ice cold RE market in the near future. I can't wait!

Anonymous
Anonymous
13 years ago

BC doesn't have to worry about this, we have no industry.

the pope
the pope
13 years ago

Thanks for the links digi.Anonymous: Funny analogy, but I think generally we try to teach people to look both ways before crossing the street and not chew on lead fishing weights. Housing is an emotional issue and everytime there is a boom people get freaked out about being priced out forever, this leads to the overpricing and subsequent crash or 'correction' if you prefer.

digi
digi
13 years ago

there's another article on bloomberg about the dollars decline."Clearly, the Canadian economy is not firing on all cylinders,'' said Dustin Reid, a senior currency strategist at ABN Amro Inc. in Chicago."And for those hoping for interest rate cuts to reignite the boom:"It is difficult to envision the Bank of Canada cutting rates while core inflation remains above the bank's midpoint target,'' ABN Amro's Reid said. Canada's core inflation rate rose to 2.3 percent in October, the highest since May 2003, compared with the central bank's target of 2 percent."

Anonymous
Anonymous
13 years ago

"There could be some tricky times ahead for anyone that bought into this overheated housing market."So what? Who cares about people that are willing to leap into a deep pit of debt without looking at the longterm picture. Should I worry too much about people that don't look both ways before they cross the street? What about people that chew on lead fishing weights?

digi
digi
13 years ago

Its a fine line between 'downturn' and 'recession'. Our economy usually follows the US by about a year. There could be some tricky times ahead for anyone that bought into this overheated housing market.This article on their leap in late mortgage payments has this quote about interest rates:Experts say this has particularly strained people who stretched financially to buy a home during the housing boom, when home prices were lofty.This year the housing market is in a deep slump.