The 2020 Mid-Year Economic Update_long

Canadian Capacity Utilization Rates Down in 2Q

The capacity utilization rate declined in 13 of the 21 major groups in the manufacturing sector.

Canadian industries operated at 81.3 percent of their production capacity in the second quarter, down from 82.6 percent in the first quarter. This was the second consecutive quarterly decline.

As in the previous quarter, the mining, quarrying and oil and gas extraction and manufacturing industries led the decline. Outside of manufacturing, capacity utilization decreased in every industry covered by the survey except forestry and logging.

The capacity utilization rate in the mining, quarrying and oil and gas extraction industry decreased from 78.9 percent in the first quarter to 75.9 percent in the second quarter. Lower demand for support activities for mining and oil and gas extraction as well as decreased oil extraction more than offset the increase in gas extraction.

The capacity utilization rate of the construction industry fell from 83.2 percent to 82.3 percent, the third consecutive quarterly decline. This decline was the result of lower production in all industry subsectors.

Capacity utilization in the forestry and logging industry rose from 86.9 percent to 89.5 percent as a result of increased production.

The capacity utilization rate declined in 13 of the 21 major groups in the manufacturing sector in the second quarter, accounting for about 75 percent of the manufacturing sector's gross domestic product.

Manufacturing industries operated at 81.9 percent of their capacity in the second quarter, down 0.9 percentage points from the first quarter. As in the previous quarter, durable goods manufacturing industries were the main source of the decline. Capacity utilization increased in only two durable goods manufacturing industries: non-metallic mineral product manufacturing and electrical equipment, appliance and component manufacturing.

In machinery manufacturing, the capacity utilization rate was down 4.4 percentage points to 77.9 percent in the second quarter, its biggest decline since the fourth quarter of 2012. The decrease was largely attributable to lower production in the agricultural, construction and mining machinery industries.

The capacity utilization rate for metal product manufacturers fell from 75.8 percent in the first quarter to 73.3 percent in the second quarter, as a result of lower production in most industry subsectors.

After increasing in the first quarter, the capacity utilization rate for food manufacturers declined 1.6 percentage points to 78.4 percent in the second quarter. Lower production in most food manufacturing subsectors was the reason for the decline.

The overall decline in manufacturing was moderated by increases in plastics and rubber products manufacturing, beverage and tobacco product manufacturing and nonmetallic mineral product manufacturing.

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