Canadian industrial capacity utilization drops to 81.7 percent in Q4

Friday, 08 March 2019 20:53:21 (GMT+3)   |   San Diego

According to Statistics Canada, Canadian industries operated at 81.7 percent of their production capacity in the fourth quarter, down from 82.8 percent in the third quarter. This was the second consecutive quarterly decline.

The manufacturing and construction sectors were the main sources of this decline. Lower capacity utilization in manufacturing, construction, mining and quarrying, and forestry and logging more than offset increases in electric power generation, transmission and distribution, and oil and gas extraction.

The manufacturing capacity utilization rate decreased 1.6 percentage points to 78.5 percent in the fourth quarter. Year over year, the rate declined by 3.0 percentage points, coinciding with lower output. Year-over-year, capacity utilization decreased in 15 of the 21 major manufacturing groups, accounting for approximately 80 percent of the manufacturing sector's gross domestic product.

The decrease in capacity utilization among petroleum and coal product manufacturers followed a strong increase in the previous quarter. The capacity utilization rate in this industry decreased by 16.1 percentage points to 72.7 percent in the fourth quarter. This represented a year-over-year decrease of 18.7 percentage points. This decline was mostly due to lower production following refurbishment and maintenance work carried out at certain refineries.

The overall decrease in the manufacturing sector was partially offset by increases in the fabricated metal products manufacturing industry, which rose for the fourth consecutive quarter. The increase coincided with high prices for fabricated metal products and building supplies. Year over year, the utilization rate for this industry rose 11.4 percentage points to 77.0 percent in the fourth quarter.

After declining 2.1 percentage points in the third quarter, capacity utilization in the construction sector was down a further 2.2 percentage points to 85.4 percent in the fourth quarter, compared with 89.6 percent in the fourth quarter of 2017. The decrease was attributable to lower activity in most construction subsectors.

Capacity utilization in mining and quarrying, excluding oil and gas extraction was down 1.1 percentage points to 76.9 percent in the fourth quarter. The decline followed a 2.2 percentage point increase in the previous quarter and was due in part to lower activity in support activities for mining and oil and gas extraction.

In a full-year 2018 analysis, the average capacity utilization rate of Canadian industries rose 1.2 percentage points to 82.8 percent in 2018, after increasing 2.4 percentage points in 2017. The rise was mainly attributable to the rebound in the oil and gas extraction subsector in the first half of the year.

In 2018, the annual average capacity utilization rate increased in mining, quarrying and oil and gas extraction as well as in construction, but decreased in forestry and logging, and electric power generation, transmission and distribution.

The annual average capacity utilization rate of all manufacturing industries edged down to 80.1 percent in 2018, after decreasing 1.4 percentage points in 2017. The capacity utilization rate was down in 12 of the 21 major manufacturing groups.

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