Canadian industries reduced their use of production capacity in the fourth quarter, with the utilization rate falling to its lowest level in more than 10 years.

Statistics Canada today reported industries operated at 81.8% of their capacity, down from 83.4% in the third quarter. The current rate is well below the most recent high of 87.1% reached in the fourth quarter of 2000.

The manufacturing sector, which continues to be hard hit by the appreciation of the Canadian dollar, was a major factor in the decline, StatsCan said.

Manufacturers reduced their production capacity utilization for a second straight quarter, operating at 80.3%, down from 82.4% in the third quarter.

The sector also suffered a cut in production in the fourth quarter due to many plant closures for retooling and inventory in the automobile assembly plants.

The rate also fell in the mining, oil and gas extraction, and construction sectors. Growth in the rate in the forestry and logging and electrical power sectors partially offset the slide in the overall rate in the fourth quarter.

The annual average rate in 2007 declined for a third consecutive year to 83.3%, down from 84.1% in 2006, StatsCan said. This was the lowest level since 1996 when the rate was 82.0%.