The 2020 Mid-Year Economic Update_long

Canadian Capacity Utilization Rates Up in 3Q

The capacity utilization rate increased in 14 of the 21 major groups in the manufacturing sector.

Canadian industries increased their production capacity by 0.6 percentage points in the third quarter to 82, following two consecutive quarterly declines, according to Statistics Canada.

The increase was largely attributable to the mining, quarrying, and oil and gas extraction and manufacturing industries.

Oil and gas extraction was mainly responsible for the growth in the capacity utilization rate, rising 3.1 percentage points to 86.5 percent in the third quarter, reflecting a higher volume of non-conventional oil extraction as well as gas extraction.

Following two quarters of decline, the capacity utilization rate for construction edged up from 83.5 percent to 83.6 percent. This gain was the result of increased residential and non-residential construction activity, which more than offset lower activity in the industry's other subsectors.

Capacity utilization in the electric power generation, transmission and distribution industry declined for a second consecutive quarter, falling from 83.2 percent to 81.1 percent as a result of lower production.

As a whole, manufacturing industries operated at 83.1 percent of their capacity in the third quarter, up 0.7 percentage points from the previous quarter. Following two consecutive quarterly declines, transportation equipment manufacturing was the main contributor to the gain, rising 2.6 percentage points to 93.4 percent in the third quarter. The increase was largely attributable to a strong gain in the production of motor vehicles and motor vehicle parts.

The capacity utilization rate increased in 14 of the 21 major groups in the manufacturing sector in the third quarter, accounting for about 65 percent of the gross domestic product of the manufacturing sector.

Following a decline in the previous quarter, the capacity utilization rate of food manufacturers rose 2.5 percentage points to 81.5 percent in the third quarter. Increased production in most food manufacturing subsectors accounted for the gain.

The capacity utilization rate for wood product manufacturing continued to grow, reaching a record high 98.6 percent in the third quarter. Increased production and weak investment in most subsectors in the industry were behind the gain.

The overall increase in the manufacturing sector was partly offset by declines, notably in machinery manufacturing, where the capacity utilization rate fell for a third consecutive quarter, down 3 percentage points to 76.2 percent in the third quarter. The decline was primarily attributable to lower production of agricultural, construction and mining machinery.

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