Capacity use among Canadian industries edged down in the first quater of 2006 in the wake of the rising Canadian dollar and a decline in foreign demand for some manufactured goods, Statistics Canada said today.

Industries operated at 85.9% of their capacity between January and March, compared with 86.1% in the fourth quarter of 2005.

However, StatsCan said “rates have remained relatively stable over the past two years, and are holding at near-record levels of capacity use.”

Statistics Canada’s industrial capacity utilization rate is the ratio of an industry’s actual output to its estimated potential output.

The first-quarter dip put the rate 1.7 percentage points below the peak of 87.6% reached in the first quarter of 1988.

A decline in foreign demand for transportation equipment and non-durable goods had a negative impact on capacity utilization in the manufacturing sector, StatsCan said.

The stronger dollar and rising foreign competition created a climate of uncertainty for manufacturers.

Rates fell in the electric power sector and the mining and oil and gas extraction sector. However, growth in capacity use in the forestry and logging and construction sectors softened the first-quarter decline.

Capacity use among manufacturers in the first quarter slipped from 84.3% to 84.1%.