Industrial capacity utilization rates, fourth quarter 2020

Released: 2021-03-12

Canadian industries operated at 79.2% of their production capacity in the fourth quarter of 2020, up from 77.4% in the previous quarter. This fourth quarter gain was largely attributable to increases in the mining, quarrying, and oil and gas extraction sector and the construction sector. However, the capacity utilization rate in most industries remained below pre-pandemic levels.

Given the recovery of the oil and gas extraction sub-sector and the early signals from the manufacturing sector, a growth in industrial capacity utilization may occur in the first quarter of 2021.

Mining, quarrying, and oil and gas extraction sector has strong showing

Chart 1 
Industrial capacity utilization in non-manufacturing industries

Capacity utilization in oil and gas extraction recorded its first quarterly increase following two consecutive quarterly declines. The capacity utilization rate rose from 72.8% in the third quarter to 76.1% in the fourth quarter. This growth was mainly attributable to higher production of crude bitumen and synthetic oil in Alberta. This increase coincided with a rise in crude oil prices. According to international merchandise trade data, exports of energy products were up 9.6% over the previous quarter. Despite an increase, the sub-sector continued to face a decline in global demand attributable to public health restrictions, and the capacity utilization rate remained below the pre-pandemic level.

Capacity utilization in mining and quarrying (excluding oil and gas extraction) rose 4.9 percentage points to 71.6% in the fourth quarter. This increase was attributable to higher levels of activity in support activities for mining, and the oil and gas extraction sub-sector, including drilling and rigging services.

After posting a strong increase in the third quarter, capacity utilization in the construction sector rose 1.5 percentage points to 88.7% in the fourth quarter. This increase coincided with low mortgage rates and favourable developments in housing demand. Building permit values (+6.1%) posted sharp gains during the quarter. According to the Labour Force Survey, there was an increase in employment in the construction sector.

Manufacturing capacity utilization rate in fourth quarter 2020 remains below its value in fourth quarter 2019 

Following a rebound in activity in the third quarter of 2020, the manufacturing sector had smaller growth in the fourth quarter, with its gross domestic product rising 1.2%.

Despite an increase from the previous quarter in the overall capacity utilization rate of the manufacturing sector, its value remained below its 2019 fourth quarter level. Year over year, the manufacturing capacity utilization rate decreased by 1.7 percentage points to 76.2% in the fourth quarter. Capacity utilization fell year over year in 13 of the 21 major manufacturing industry groups, representing about three-quarters of the gross domestic product of the manufacturing sector.

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

For petroleum and coal product manufacturers, activity remained low. Year over year, the capacity utilization rate dropped 9.0 percentage points to 77.7% in the fourth quarter. Fuel production continued to be impacted by the slow recovery in global demand following closures and travel bans imposed because of the pandemic.

Fabricated metal product manufacturers posted a 5.9 percentage point decrease compared with the fourth quarter of 2019. The capacity utilization rate was 66.9%, since the industry was heavily affected by the recently reduced activity in engineering and in transportation equipment assembly plants.

Year over year, wood product manufacturers posted an increase of 5.9 percentage points in the fourth quarter. Their capacity utilization rate reached 83.2%. This gain coincided with the sharp rise in prices and the recovery of residential construction. Strong US residential construction buoyed Canadian exports of forestry products and building and packaging materials.

The year 2020 in review

Rail blockades, the COVID-19 pandemic, and the public health measures taken to curb the spread of COVID-19 affected economic activities to varying degrees in 2020. The industrial capacity utilization rate declined by 5.4 percentage points to 77.2% in 2020, compared with 2019.

The mining, quarrying, and oil and gas extraction sector fell 6.9 percentage points to 74.8% in 2020. The oil and gas extraction sub-sector was the main source of that decline. Lower levels of activity, as measured by gross domestic product, were observed in oil and gas extraction (excluding oil sands) (-6.4%) and oil sands extraction (-5.8%). These declines were attributable to the decrease in overall demand for energy products as a result of the public health restrictions imposed in response to the pandemic.

The construction sector experienced an annual decline of 3.3 percentage points to 86.5% in 2020. This decrease was attributable to reduced activity in engineering and in non-residential building construction. According to the Building Permits Survey, non-residential construction experienced its largest decline (-17.4%) since 2009. Demand for office buildings and shopping malls fell as a result of telework and online shopping related to the pandemic. Residential construction was buoyed by low mortgage rates and an increase in household savings rates, and this partially offset the decline in non-residential construction.

The manufacturing sector experienced an annual decrease in capacity utilization rate of 6.3 percentage points to 72.3% in 2020. All 21 major industry groups recorded an annual decrease compared with 2019.

The capacity utilization rate of transportation equipment manufacturers fell 12.0 percentage points to 70.0% in 2020. In March and April, at the beginning of the pandemic, most motor vehicle manufacturers geared back or even halted operations for public health reasons. Aerospace product and parts manufacturers experienced a decline in operations as a result of order cancellations and travel restrictions. This drop coincided with a decrease in exports of aircraft and other motor vehicle parts.

The annual capacity utilization rate of petroleum and coal product manufacturers decreased by 11.5 percentage points to 74.3% in 2020. This decline was mainly attributable to a drop in global demand for energy products related to lockdown measures.

Products

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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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