Canadian wood products manufacturing industries felt the impact of the American housing slump in the third quarter of 2007.

Statistics Canada released data Friday that showed Canadian industries overall ran at 82.7 per cent capacity between July and September, down from 83.5 per cent in the previous quarter, thanks mainly to a steep 5.1-per-cent drop in capacity use by wood products because of a drop in U.S. demand.

StatsCan said this decline puts the current rate 4.4 percentage points below the most recent high of 87.1 per cent reached in the fourth quarter of 2000.

In the wood products manufacturing industry, capacity use fell from 73 per cent to 67.9 per cent, the sixth consecutive quarterly decline and the lowest rate since the first quarter of 1991, when the rate was 62.1 per cent.

"In the manufacturing sector, accounting for almost half of total production, 16 of the 21 major groups reduced their capacity utilization in the third quarter, including a significant decline in the wood product manufacturing industry," read the report. "Wood product manufacturers had difficulty obtaining supplies because of labour conflicts in Western Canada, and they bore the brunt of a collapse in US demand, the result of the sharp slowdown in residential construction in the United States."

Capacity use in the transportation equipment manufacturing industry, which accounts for 18 per cent of the production in the manufacturing sector, rose from 80.4 per cent to 82.7 per cent, the largest hike in its rate in two years. In particular, automobile exports to the United States jumped in September.

Not surprising, considering Canada's red hot natural resource sector, mining, with 15 per cent of total production, was the only sector to post a rise in its rate in the third quarter as a result of a hike in oil and gas extraction activities and higher international demand for metal ore.