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Industrial capacity utilization rates, second quarter 2018

Released: 2018-09-12

Industrial capacity use

85.5%

Second quarter 2018

1.8 pts increase

(quarterly change)

Canadian industries operated at 85.5% of their production capacity in the second quarter, up from 83.7% in the first quarter. This follows a slight decrease in capacity utilization in the first quarter of 2018 from the fourth quarter of 2017.

The increase in the second quarter of 2018 was led by the mining, quarrying and oil and gas extraction sector and, to a lesser extent, the manufacturing sector.

Increase in capacity utilization led by oil and gas extraction

The capacity utilization rate of the oil and gas extraction subsector increased for a fifth consecutive quarter, rising from 82.7% in the first quarter to 87.1% in the second quarter. The rate has risen 7.6 percentage points since the first quarter of 2017, due to lower oil transportation capacity combined with higher oil prices in the second quarter, resulting in increased production.

In the construction sector, capacity use rose 0.8 percentage points to 93.0% in the second quarter. Increased activity in residential and non-residential building construction led the gain.

Conversely, capacity utilization in mining—excluding oil and gas extraction—and quarrying fell 1.4 percentage points to 76.0%, following a flat first quarter. A slowdown in iron ore mining due to work interruptions constrained production during the quarter.

Durable goods lead capacity utilization in the manufacturing sector

The manufacturing capacity utilization rate rose 1.8 percentage points to 81.8% in the second quarter. Year over year, the rate was up 0.7 percentage points. Increased production in durable goods manufacturing industries drove the increase.

Capacity utilization rose in 16 of the 21 major manufacturing groups, accounting for approximately 80% of the manufacturing sector's gross domestic product.

Chart 1  Chart 1: Year-over-year change by industry (second quarter 2018 compared with second quarter 2017)
Year-over-year change by industry (second quarter 2018 compared with second quarter 2017)

After falling 13.3 percentage points in the first quarter, the capacity utilization rate in the non-metallic mineral product manufacturing industry rebounded 19.3 percentage points to 76.2% in the second quarter. This represents a year-over-year change of 3.4 percentage points as demand and production for this industry are influenced by the seasons, decreasing in the winter and rising in the spring.

Among food manufacturers, the capacity utilization rate was up 2.8 percentage points to 85.2% in the second quarter, due to increased production of most foods. Year over year, the rate increased by 4.8 percentage points.

The capacity utilization rate of the primary metal manufacturing industry, which includes aluminum and steel, increased 2.1 percentage points to 80.6% in the second quarter. The rate was up 3.5 percentage points year over year, partly due to increased exports of steel and aluminum products, in anticipation of new customs tariffs on Canadian exports of steel and aluminum products to the United States.

The overall increase in the manufacturing sector was partially offset by decreases, mainly in the petroleum and coal product manufacturing industry. After edging down in the first quarter, the capacity utilization rate in the petroleum and coal product manufacturing industry fell 12.8 percentage points to 78.2% in the second quarter. Lower production caused by temporary shutdowns and maintenance work at several refineries, which began in April and continued into May, led to the downturn. Year over year, the rate fell 7.8 percentage points.


  Note to readers

The industrial capacity utilization rate is the ratio of an industry's actual output to its estimated potential output.

This program covers all manufacturing industries, as well as forestry and logging, mining, quarrying and oil and gas extraction, electric power generation, transmission and distribution, and construction industries.

With this release of the industrial capacity utilization rates, the data have been revised back to the first quarter of 2017 to reflect the latest revisions to the source data. In particular, for manufacturing industries, the agency has integrated the new monthly estimates from the Monthly Survey of Manufacturing beginning with the January 2017 reference month. The data are not seasonally adjusted. For non-manufacturing industries, the quarterly pattern is derived from the output-to-capital ratio series, the output being the real gross domestic product at basic prices, seasonally adjusted, by industry.

Next release

Data on industrial capacity utilization rates for the third quarter will be released on December 12.

Products

The document "Industrial capacity utilization rates – Sources and methods," which is part of Income and Expenditure Accounts Technical Series (Catalogue number13-604-M), is now available.

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

For more information, or to enquire about the concepts, methods or data quality of this release, contact us (toll-free 1-800-263-1136; 514-283-8300; STATCAN.infostats-infostats.STATCAN@canada.ca) or Media Relations (613-951-4636; STATCAN.mediahotline-ligneinfomedias.STATCAN@canada.ca).

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