Canada: Industrial Capacity Utilization Rates, Q4 2016

Canadian industries operated at 82.2% of their production capacity in the fourth quarter, up from 81.6% in the previous quarter. This was the second consecutive quarterly gain.

Mining, quarrying and oil and gas extraction as well as construction were the main sources of the advance. Increases in capacity utilization in mining, quarrying and oil and gas extraction and construction and in non-durable goods manufacturing more than offset declines in durable goods manufacturing, electric power generation, transmission and distribution, and forestry and logging.

The mining and quarrying industry drives the overall increase

The mining and quarrying industry was the main source of the increase in the capacity utilization rate in the fourth quarter. Due to a significant gain in support activities for mining and oil and gas extraction, the capacity utilization rate of the mining and quarrying industry rose 5.0 percentage points to 73.9%. This was the largest gain since the third quarter of 2011.

After seven straight quarterly declines, the capacity utilization rate of the construction industry rose from 83.3% in the third quarter to 84.2% in the fourth quarter. The increase was mostly attributable to residential construction and repairs.

After rising 7.8 percentage points in the third quarter, as operations resumed following the Fort McMurray wildfires, the capacity utilization rate for oil and gas extraction increased 0.3 percentage points to 82.4% in the fourth quarter. Higher volumes of non-conventional oil extraction accounted for the gain.

In the electric power generation, transmission and distribution industry, the capacity utilization rate decreased from 86.9% to 86.1%, as a result of warmer than usual weather in the fall of 2016 across the western part of the country. The decline followed a 3.4 percentage point increase in the third quarter.

The capacity utilization rate of the manufacturing sector edges down on lower durable goods manufacturing

After rising 0.6 percentage points the third quarter, the capacity utilization rate of all manufacturing industries edged down 0.1 percentage points in the fourth quarter to 81.7%. Most of this decrease was attributable to durable goods manufacturing industries.

The capacity utilization rate of the primary metal manufacturing industry declined for the second consecutive quarter, down 3.0 percentage points to 75.6% in the fourth quarter on lower production in most subsectors. In the third quarter, the primary metal manufacturing industry was down by 0.9 percentage points (from 79.5% to 78.6%).

The rate for transportation equipment manufacturers fell from 88.7% in the third quarter to 87.2% in the fourth quarter, led by lower production of motor vehicles and motor vehicle parts and of aerospace products and parts.

The overall decline in the manufacturing sector was mitigated by increases in selected industries, particularly in chemical product manufacturing and wood product manufacturing.

For the fourth time in five quarters, chemical product manufacturers increased their industrial capacity utilization, from 87.7% in the third quarter to 89.6% in the fourth quarter. Increased production occurred in most industry subsectors.

After falling 3.7 percentage points in the second quarter, the capacity utilization rate of the wood product manufacturing industry rose for the fifth time in six quarters, from 87.5% in the third quarter to 90.2% in the fourth quarter. The advance was attributable to an overall increase in production.

Annual average rate: Slight increase in 2016 following a decline a year earlier

The average capacity utilization rate of Canadian industries edged up 0.2 percentage points to 81.0% in 2016, after falling 1.6 percentage points in 2015.

The annual average capacity utilization rate of non-manufacturing industries was up in 2016, while the manufacturing sector posted the same annual average rate as the previous year (81.8%). The capacity utilization rate rose in 9 of the 21 major manufacturing industries.

StatsCanada

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Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell