Canadian Industrial Capacity Use Continues to Slide in Q3

(CEP News – Geoff Matthews)

Canadian industries used the lowest percentage of their production capacity on record in the third quarter, Statistics Canada reported Friday, with manufacturing and construction both down sharply. Industries operated at 77.4% of their capacity, down from an adjusted 77.7% in the second quarter, which was previously reported as 78.9%. Analysts had expected the capacity utilization rate to be 78.3%. The Q3 rate was the lowest since StatsCan began keeping data on capacity utilization in 1987, and 9.7 percentage points down from the peak of 87.1% reached in the final quarter of 2000.

Capacity utilization in the transportation equipment sector, which consists primarily of automobiles and parts, was down 2.7% from Q2 and 15.1% from a year ago to 71.1%, the lowest level since Q4 of 1992. In the manufacturing sector, industries used 78% of their production capacity in the quarter, the lowest level in 15 years. Construction declined 1.2% from the second quarter and 4% year-over-year to 75.9% of capacity utilization.

Capacity use also fell sharply in the petroleum and coal products industry, dropping to 76.3% from 79.9% in Q2 and 86.9% a year earlier. The primary metals manufacturing sector recorded a sharp increase in capacity utilization in the quarter, up 6.3% to 96.1%. That represented a 7.2% increase from year-ago levels. Chemical products manufacturing posted its third straight quarterly increase, rising to 80.8% from 79.2% in Q2.

A decrease in production capacity helped lift the capacity utilization rate in paper products manufacturing from 86% in the second quarter to 87.8% in Q3. The mining sector ended three straight quarters of declining rates with an increase from 69.3% to 72.6%. On an annual basis, however, the sector was down 4.5%.

Link to the Statistics Canada report here.