According to Statistics Canada, Canadian industries operated at 81.7 percent of their production capacity in the third quarter, down from 83.3 percent in the previous quarter.
The mining, quarrying and oil and gas extraction sector was the main source of this decline. An increase in the construction sector was more than offset by declines in the mining, quarrying and oil and gas extraction, manufacturing, electric power generation, transmission and distribution, and forestry and logging sectors.
Capacity utilization in mining and quarrying (excluding oil and gas extraction) fell 2.3 percentage points to 73.5 percent in the third quarter. Lower activity levels, as measured within gross domestic product, were observed in the subsectors of support activities for mining, quarrying and oil and gas extraction (-8.9 percent), in non-metallic mineral mining and quarrying (-2.3 percent) and iron ore mining (-2.8 percent).
The capacity utilization rate in the construction sector rose 1.7 percentage points to 91.2 percent in the third quarter. This was the highest capacity utilization rate since the third quarter of 2007 and the third consecutive quarterly increase. This gain coincided with higher investment in building construction, mainly residential building construction.
Year over year, the capacity utilization rate for manufacturing fell 1.8 percentage points. Capacity utilization was down year over year in 14 of the 21 major manufacturing industries, representing approximately 80 percent of gross domestic product in the manufacturing sector.
The capacity utilization rate in manufacturing was 78.3 percent in the third quarter, the lowest rate since the first quarter of 2017.
Compared with the same quarter in 2018, the capacity utilization rate of chemical manufacturing decreased 8.0 percentage points to 76.7 percent in the third quarter. This year-over-year decline was led by decreased activity in pharmaceutical and medicine manufacturing. This was the second straight quarterly decline, as the capacity utilization rate fell 3.6 percentage points from the previous quarter.
The capacity utilization rate of primary metal manufacturers decreased 4.5 percentage points year over year to 74.8 percent in the third quarter. The decline was attributable to lower sales and higher inventories of iron and steel mill and ferro-alloy products in the third quarter.