Canadian industries slashed their capacity utilization to the lowest levels on record in the second quarter, Statistics Canada data showed Monday.

Businesses cut their utilization rate by 2.8 percentage points to 67.4 per cent during the quarter, a much smaller decrease than the 5.2 percentage point drop in the first quarter, but still the lowest rate since the agency began to track the data in 1987.

Steam rises from a stack at a factory in Hamilton, Ont. According to Statistics Canada, the use of capacity at Canadian factories hit an all-time low in the second quarter. (Adrian Wyld/Canadian Press)

Capacity utilization is a measure of to what extent industries are using the capacity to produce already at their disposal. It compares an industry's actual output against its potential output at any given time.

Of the 21 major industries in the manufacturing group, 20 used less of their production capacity in the second quarter, reflecting the weak demand for manufactured goods. The lone exception was food manufacturing, where utilization stayed stable at 81.5 per cent, unchanged from the first quarter.

In the second quarter, manufacturers reduced their use of production capacity for a fourth consecutive quarter to 64.2 per cent, compared with 67.1 per cent in the first quarter of 2009 and 79.9 per cent in the second quarter of 2008.

Among manufacturers, the primary metal manufacturing industry led the decline, with capacity use in this industry falling to 61.9 per cent, the lowest level on record and well below the peak of 97.6 per cent in the third quarter of 2008.

Capacity use fell in all sectors in the non-manufacturing group, with the most notable drop posted by the mining and oil and gas extraction sector.

The mining sector operated at 50.2 per cent of its production capacity in the second quarter, down from 56.5 per cent in the first quarter, while the oil and gas extraction sector cut capacity use by 1.9 percentage points to 76.1 per cent, erasing the 1.2 percentage point gain registered in the first quarter.