Canada: Industrial Capacity Utilization Rates, Q2 2017

Canadian industries operated at 85.0% of their production capacity in the second quarter of 2017, up from 83.2% in the previous quarter. This reflected the very strong growth in economy-wide production. This was the second straight quarter where the industrial capacity utilization rate exceeded the historical average of 83.1%.

The mining, quarrying and oil and gas extraction sector was the main source of the increase.

Oil and gas extraction is the main source of the increase

Following two consecutive quarters of declines, the capacity utilization rate in oil and gas extraction rose 3.3 percentage points to 84.0% in the second quarter, due to higher volumes of oil and gas extraction.

The capacity utilization rate in construction posted a third consecutive quarterly increase, rising from 86.4% to 87.7%. As in the previous quarter, the increase was mainly due to residential construction, and to engineering and repair work.

The capacity utilization rate in forestry and logging fell from 86.8% to 85.7% in the second quarter, a third consecutive quarterly decline. This decrease was attributable to a decline in activities in the industry.

Increases in the manufacturing sector are attributable to durable goods manufacturing

The manufacturing industry operated at 84.2% of its capacity, up 0.7 percentage points from the previous quarter. Durable goods manufacturing industries were the main source of this increase.

The capacity utilization rate rose in 15 of 21 major manufacturing industries, representing approximately 85% of the gross domestic product in the manufacturing industry.

The capacity utilization rate in the machinery manufacturing industry rose 5.1 percentage points to 85.3% in the second quarter, the largest gain since the fourth quarter of 2011. This increase was attributable to an overall gain in production in the industry.

The rate for transportation equipment manufacturers rose from 86.7% to 87.8%, due to increased production in most industry subsectors.

After declining in the first quarter, the capacity utilization rate for computer and electronic product manufacturers rose 4.4 percentage points to 86.8% in the second quarter. A widespread increase in production in all computer and electronic product manufacturing subsectors led to this gain.

The overall increase in the manufacturing sector was partially offset by declines in a few industries, notably in beverage and tobacco product manufacturing. This industry saw its capacity utilization rate fall from 87.0% to 82.2%, reflecting lower production.

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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