The 2020 Mid-Year Economic Update_long

Canadian Capacity Utilization Rates Up in 3Q

Oil and gas extraction was the main source of the gain.

Canadian industries operated at 81.9 percent of their production capacity in the third quarter, up from 79.7 percent in the previous quarter, according to Statistics Canada.

The 2.2 percentage point gain was the largest quarterly increase recorded by Canadian industries since industrial capacity utilization rates were first published in their current form starting in the first quarter of 1987.

Oil and gas extraction was the main contributor to the increase in the third quarter, rising 8 percentage points to 82.3 percent following a decline in the second quarter. An increase in the volume of oil extraction, after operations resumed following the wildfires in Fort McMurray and scheduled maintenance outages, was mainly responsible for the gain.

In the electric power generation, transmission and distribution industry, the capacity utilization rate rose from 83.8 percent to 87.4 percent, as a result of increased production. The rate in this industry has risen for three consecutive quarters, following three quarters of decline.

The capacity utilization rate in the construction industry declined for the sixth time in seven quarters, falling from 83.7 percent in the second quarter to 83.4 percent in the third quarter. The decrease in the third quarter was the result of an overall decline in activities in the industry.

Following a decline in the second quarter, the capacity utilization rate of the manufacturing sector as a whole rose 0.7 percentage points in the third quarter to 82.6 percent. Non-durable goods manufacturing was the main source of the increase.

In the third quarter, 9 of the 21 major manufacturing industries increased their capacity utilization, accounting for over half of the gross domestic product in the sector.

The capacity utilization rate in the food manufacturing industry reached a record 85.1 percent in the third quarter. This was the third straight quarterly gain. Increased production in most of the subsectors in the industry was behind the gain.

After decreasing for five consecutive quarters, the capacity utilization rate in the machinery manufacturing industry rebounded from 70.4 percent in the second quarter to 73.6 percent in the third quarter. The advance was attributable to an overall increase in production.

Chemical product manufacturers increased their industrial capacity utilization rate for the third time in four quarters, rising from 83 percent in the second quarter to 85.7 percent in the third quarter. Higher production in most of the subsectors in the industry was the reason for the gain.

The overall gain in the manufacturing sector was partially offset by decreases, particularly in the transportation equipment industry.

The capacity utilization rate of transportation equipment manufacturers fell from 92.2 percent in the second quarter to 90.5 percent. Decreased production of motor vehicles and motor vehicle parts and aerospace products and parts were the main source of this decline.

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