According to Statistics Canada, Canadian industries operated at 76.5 percent of their production capacity in the third quarter, up from 70.7 percent in the previous quarter. This third quarter gain was led by increases in the manufacturing and construction sectors.
After being forced to slow or suspend their activities in the second quarter, most Canadian industries saw gradual recovery of their activities after public health measures were eased. Nevertheless, the capacity utilization rate of most industries remained below pre-pandemic levels. Given the recently implemented public health measures, a slowdown in industrial capacity utilization may occur in the fourth quarter, Statistics Canada said.
Capacity utilization in the construction sector rose 7.2 percentage points to 87.2 percent in the third quarter. This increase coincided with low mortgage rates, more favorable labor market conditions, and higher pay for employees. Building permit values (+17.0 percent) posted sharp gains during the quarter, with residential building permits reaching their highest level since the beginning of the series.
Throughout the third quarter, there were many signs of a gradual resumption of activities in the manufacturing sector. Although, employment growth in manufacturing was observed throughout the three months of the quarter, according to the Labor Force Survey, third-quarter employment in this sector (1.67 million) was below its level in the fourth quarter of 2019 (1.71 million).
Despite a rebound in the overall capacity utilization rate for manufacturing, its value remained below the level posted in the third quarter of 2019. Year over year, the capacity utilization rate of manufacturing decreased 3.0 percentage points to 75.3 percent in the third quarter. Capacity utilization fell year over year in 18 of the 21 major manufacturing industries, representing about three-quarters of the gross domestic product of the manufacturing sector.