The 2020 Mid-Year Economic Update_long

Canadian Industry at 76% of Capacity in Second Quarter

Industrial capacity utilization rate has continued to rise over the past year.

Canadian industries operated at 76 percent of their production capacity in the second quarter, up 1.6 percentage points from the previous quarter, according to Statistics Canada. This was the fourth consecutive quarterly increase.

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Since the record low of 68.1 percent set in the second quarter of 2009, the industrial capacity utilization rate has risen by 7.9 percentage points to 76 percent.

The strength recorded by Canadian industries as a whole was driven by both the manufacturing sector, which saw its rate climb from 75.0 percent to 76.7 percent, and the non-manufacturing sector.

Manufacturing by Industry
Capacity use was up in 16 of the 21 major manufacturing industries. Capacity use in total manufacturing increased 1.7 percentage points in the second quarter to 76.7 percent. Although this was the fourth consecutive gain, the increase fell short of the advances recorded during the previous three quarters.

Industries contributing to the higher rate for total manufacturing were transportation equipment, primary metal, machinery manufacturing and wood product manufacturing.

The transportation equipment industry operated at 66.6 percent of its capacity in the second quarter, up 2.1 percentage points from the previous quarter. Growth in the industry's capacity use was a result of higher production by manufacturers of motor vehicles and motor vehicle parts and manufacturers of railroad rolling stock.

In the primary metal manufacturing industry, the utilization rate increased 5.1 percentage points from the previous quarter to 90.9 percent. Appreciable gains in production were posted by all metal manufacturing industries except alumina and aluminium production and processing.

Machinery manufacturers used 74.2 percent of their production capacity, up from 71.0 percent in the previous quarter. Higher production of agricultural, construction and mining machinery, industrial machinery, and commercial and service industry machinery was behind the gain in capacity use.

Capacity utilization by the wood product manufacturing industry advanced from 74.4 percent to 78.1 percent. The main contributing factor was higher production by sawmills and by veneer, plywood and engineered wood product manufacturers.

Declines in computer and electronic product manufacturing (from 95.2 percent to 89.8 percent) and chemical manufacturing (from 82.6 percent to 81.5 percent) slowed the growth of the manufacturing sector.

Non-Manufacturing Use
In the non-manufacturing group, capacity use advanced in all sectors except electric power generation, transmission and distribution.

In the forestry and logging sector, capacity utilization rose 9.9 percentage points from the previous quarter to 89.9 percent in the second quarter.

The oil and gas extraction sector also increased its capacity use from 77.2 percent to 81.5 percent over the same period. This gain reflects higher crude petroleum extraction activity, which more than offsets lower activity in natural gas facilities.

The mining extraction industry increased its capacity use from 66.3 percent in the first quarter to 69.0 percent in the second quarter, mainly as a result of copper, nickel, lead, zinc and potash extraction activity.

Capacity utilization in the construction sector edged up from 72.1 percent to 72.9 percent, as production in residential construction rose 2.8 percent.

In the electric power generation, transmission and distribution sector, the utilization rate fell from 77.8 percent in the first quarter to 75.6 percent in the second quarter. Demand for electricity was down 2.1 percent in the second quarter from the first quarter.

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