Industrial capacity utilization rates, second quarter 2020

Released: 2020-09-11

Canadian industries operated at 70.3% of their production capacity in the second quarter, down from 79.8% in the previous quarter. This was the lowest rate since the first quarter of 1987, when the industrial capacity utilization rates, in their present form, were first published. This dip was due to a slowdown in most sectors following the physical distancing measures imposed in mid-March to stop the spread of COVID-19.

With the gradual resumption of economic activities following easing of the physical distancing measures implemented in the spring, an upward trend in the industrial capacity utilization rate should be observed in most industries in the third quarter.

The manufacturing sector was the main driver of this decrease. According to the results of the Monthly Survey of Manufacturing, many manufacturers reported that their activities were affected by the COVID-19 pandemic. In addition to disruptions in the supply chain, most industries were forced to slow production or close plants because of the physical distancing measures imposed by the different levels of government. In particular, non-essential businesses closed and they began to gradually reopen only midway through the quarter.

Widespread decline in capacity utilization of non-manufacturing industries

Capacity utilization in the construction sector fell sharply, down 10.6 percentage points to 80.2% in the second quarter. This was the largest quarterly decrease observed since the beginning of the time series in 1987. A general decline in activities across all industry subsectors was responsible for the drop.

Chart 1 
Industrial capacity utilization in non-manufacturing industries

Capacity utilization in mining and quarrying (excluding oil and gas extraction) fell 14.5 percentage points to 56.3% in the second quarter. This was the lowest level observed since the third quarter of 2009. Decreased activity was observed in all industry subsectors, especially support activities for mining, oil and gas extraction; and metal ore mining.

Capacity utilization in oil and gas extraction fell for a second consecutive quarter, going from 80.9% in the first quarter to 74.0% in the second quarter. This dip was driven by lower production, except in natural gas extraction. The subsector saw a worldwide oversupply, lower oil barrel prices and a drop in global demand on account of the lockdown measures to control the pandemic.

Compared with the same quarter in 2019, the capacity utilization rate of manufacturing falls sharply due to pandemic

Year over year, the capacity utilization rate of manufacturing decreased 17.1 percentage points to 63.3% in the second quarter, the lowest rate since the beginning of the time series in 1987. Capacity utilization fell year over year in the 21 major manufacturing industries, with durable goods manufacturers, particularly transportation equipment makers, leading the overall drop.

Chart 2 
Year-over-year change by industry (second quarter 2020 compared with second quarter 2019)

The capacity utilization rate of transportation equipment manufacturers fell 43.2 percentage points year over year to 40.9%. According to the Monthly Survey of Manufacturing, this decline was driven by a production slowdown following the closure of motor vehicle assembly plants during the pandemic, mostly in April. The industry was also affected by disruptions in the supply chain. This drop coincides with the decrease in the gross domestic product of the motor vehicle manufacturing industry (-61.1%).

Compared with the same quarter in 2019, the capacity utilization rate of metal product manufacturing decreased 19.8 percentage points to 58.4%. In the Monthly Survey of Manufacturing, many manufacturing industries reported lower production due to cancellations or delays in construction projects.

Year over year, the capacity utilization rate of petroleum and coal product manufacturing fell 18.8 percentage points to 66.8%. This decline was mainly due to lower production at certain refineries at the beginning of the quarter and coincided with the drop in the industry's gross domestic product (-21.9%). According to the Monthly Survey of Manufacturing, many refineries curtailed production in response to lower prices amid lower demand for energy products.

Products

The data visualization product "Overview of the industrial capacity utilization rate: Interactive tool," which is part of Statistics Canada — Data Visualization Products (Catalogue number71-607-X), is now available.

The Economic accounts statistics portal, accessible from the Subjects module of our website, features an up-to-date portrait of national and provincial economies and their structure.

The Latest Developments in the Canadian Economic Accounts (Catalogue number13-605-X) is available.

The User Guide: Canadian System of Macroeconomic Accounts (Catalogue number13-606-G) is available.

The Methodological Guide: Canadian System of Macroeconomic Accounts (Catalogue number13-607-X) is available.

Contact information

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