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Canada Industrial Capacity Utilization Rates – Second Quarter 2007
Source: Statistics Canada
Canadian industries increased the use of their production capacity for the second consecutive quarter between April and June, albeit marginally.
Industries operated at 83.0% of their capacity in the second quarter, up only slightly from 82.8% in the first quarter. The back-to-back gains so far this year halted four consecutive quarters of decline in 2006.
A downturn in motor vehicle exports and difficulties experienced by the mining sector played a large part in dampening second-quarter growth.
The industrial capacity utilization rate is the ratio of an industry's actual output to its estimated potential output. For this release, rates have been revised back to the first quarter of 2005 to reflect the revised source data.
Capacity utilization was up for the vast majority of manufacturers of non-durable goods. However, reduced demand for automotive products in the United States and difficulties affecting the wood products manufacturing industry exerted downward pressure on second-quarter growth in capacity use in the manufacturing sector.
Even so, manufacturers were optimistic about production prospects for the third quarter. According to the July 2007 Business Conditions Survey, manufacturers were anticipating increased production from July to September this year despite the higher Canadian dollar and higher prices for raw materials.
In the mining sector, capacity use fell sharply. This was due to reduced activity by exploration companies in light of low natural gas prices, and to labour disputes that disrupted production at metal mines.
Capacity use rates were down in the forestry and logging sector, and up in the electric power, oil and gas extraction and construction sectors.
Rebound in the manufacturing sector
Capacity use rose slightly in the manufacturing sector in the second quarter of 2007 following stagnation during the first three months of the year. Manufacturers used 81.3% of their production capacity, compared with 81.0% the previous quarter.
Of the 21 major manufacturing groups, 16 posted gains in capacity use. The overall increase in manufacturing was however dampened by declines in the transportation equipment and wood products industries in the second quarter.
On the other hand, growth was particularly significant for fabricated metal products, computer and electronic products and machinery.
Capacity use for manufacturers of fabricated metal products was 80.9%, up slightly from 78.7% in the previous quarter. Most of the major components of this industry—architectural products and structural metal products in particular—contributed to the 2.5% growth in production in this industry.
In the computer and electronic products industry, manufacturers increased their capacity by 2.1 percentage points to 93.7%, the third consecutive quarterly increase. It was the highest rate posted by this industry since the fourth quarter of 2000, when it was 94.3%. Manufacturers of computer equipment, where production rose 6.3%, accounted for a large part of the overall industry results.
In the machinery manufacturing industry, the rate rose from 80.7% in the first quarter to 82.7% in the second quarter. A big gain in production among machinery manufacturers was due largely to an 11.4% increase in the production of commercial and services industry machinery.
Capacity use by beverage and tobacco manufacturers rose from 79.2% to 83.0%, the highest level since the first quarter of 1999, when it was 83.2%. The gain was due to a 4.0% increase in production.
The transportation equipment manufacturing industry, where capacity use fell from 82.4% to 80.5%, was adversely affected by a decline in foreign demand for automotive products. Production in this industry was down owing to decreased production of vehicles and automotive parts. The other main components of this industry increased their production in the second quarter.
In the wood products manufacturing industry, the rate fell from 75.7% to 73.9%. This was the fifth consecutive quarterly decline and the lowest rate posted by this industry since the second quarter of 1991, when the rate was 70.1%. Production in this industry fell by 1.6% from April to June.
Sharp decline in the rate in the mining sector
In the mining sector, capacity use plunged by 8.2 percentage points to 74.4%. The pronounced downturn in exploration and drilling activities, along with labour disputes at copper, nickel, lead and zinc mines as well as at iron ore processing plants, resulted in a significant drop in mineral production.
In the forestry and logging sector, capacity utilization tumbled from 87.0% to 83.2% in the wake of a 5.4% decline in production.
Capacity utilization rose from 86.9% to 90.3% in the electric power sector. This was the first time since the third quarter of 2005 that the rate has been above 90%. Power production was up 3.4% in the second quarter.
Oil and gas extraction increased in the second quarter, resulting in a capacity utilization rate of 86.0%, up from 83.3% in the previous quarter. Natural gas production increased substantially to meet the demand from the United States.
In the construction industry, the increase in production capacity was similar to the growth in production. The rate was 86.0%, virtually identical to the 85.9% level posted in the previous quarter.
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Industrial capacity utilization rates
| |||||||
|
|
Second quarter 2006r
|
First quarter 2007r
|
Second quarter 2007
|
Second quarter 2006 to second quarter 2007
|
First quarter to second quarter 2007
| ||
|
|
%
|
% point change
| |||||
|
Total industrial
|
84.6
|
82.8
|
83.0
|
-1.6
|
0.2
| ||
|
Forestry and logging
|
87.6
|
87.0
|
83.2
|
-4.4
|
-3.8
| ||
|
Mining and oil and gas extraction
|
82.7
|
83.0
|
81.2
|
-1.5
|
-1.8
| ||
|
Oil and gas extraction
|
81.9
|
83.3
|
86.0
|
4.1
|
2.7
| ||
|
Mining
|
84.0
|
82.6
|
74.4
|
-9.6
|
-8.2
| ||
|
Electric power generation, transmission and distribution
|
87.5
|
86.9
|
90.3
|
2.8
|
3.4
| ||
|
Construction
|
87.9
|
85.9
|
86.0
|
-1.9
|
0.1
| ||
|
Manufacturing
|
83.3
|
81.0
|
81.3
|
-2.0
|
0.3
| ||
|
Food
|
81.4
|
77.6
|
77.7
|
-3.7
|
0.1
| ||
|
Beverage and tobacco products
|
73.5
|
79.2
|
83.0
|
9.5
|
3.8
| ||
|
Beverage
|
75.1
|
81.2
|
84.8
|
9.7
|
3.6
| ||
|
Tobacco
|
65.5
|
64.9
|
70.3
|
4.8
|
5.4
| ||
|
Textile mills
|
69.1
|
75.8
|
77.7
|
8.6
|
1.9
| ||
|
Textile product mills
|
71.8
|
80.6
|
81.3
|
9.5
|
0.7
| ||
|
Clothing
|
80.7
|
73.5
|
75.2
|
-5.5
|
1.7
| ||
|
Leather and allied products
|
75.3
|
82.8
|
83.9
|
8.6
|
1.1
| ||
|
Wood products
|
85.0
|
75.7
|
73.9
|
-11.1
|
-1.8
| ||
|
Paper
|
86.7
|
90.1
|
89.4
|
2.7
|
-0.7
| ||
|
Printing and related support activities
|
76.0
|
72.3
|
75.3
|
-0.7
|
3.0
| ||
|
Petroleum and coal products
|
84.7
|
79.8
|
80.1
|
-4.6
|
0.3
| ||
|
Chemical
|
83.3
|
83.8
|
84.3
|
1.0
|
0.5
| ||
|
Plastics and rubber products
|
78.3
|
71.6
|
72.8
|
-5.5
|
1.2
| ||
|
Plastic products
|
76.1
|
69.7
|
71.1
|
-5.0
|
1.4
| ||
|
Rubber products
|
86.2
|
78.4
|
78.8
|
-7.4
|
0.4
| ||
|
Non-metallic mineral products
|
82.5
|
78.8
|
79.0
|
-3.5
|
0.2
| ||
|
Primary metal
|
94.6
|
90.9
|
90.1
|
-4.5
|
-0.8
| ||
|
Fabricated metal products
|
79.8
|
78.7
|
80.9
|
1.1
|
2.2
| ||
|
Machinery
|
81.5
|
80.7
|
82.7
|
1.2
|
2.0
| ||
|
Computer and electronic products
|
88.7
|
91.6
|
93.7
|
5.0
|
2.1
| ||
|
Electrical equipment, appliance and component
|
77.6
|
80.5
|
82.5
|
4.9
|
2.0
| ||
|
Transportation equipment
|
87.3
|
82.4
|
80.5
|
-6.8
|
-1.9
| ||
|
Furniture and related products
|
76.4
|
77.9
|
77.5
|
1.1
|
-0.4
| ||
|
Miscellaneous manufacturing
|
82.5
|
74.1
|
76.0
|
-6.5
|
1.9
| ||
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