Industrial capacity utilization down in Q2: StatsCan

Canadian industries operated at 78.4 percent of their production capacity in the second quarter, down from 78.9 percent in the previous quarter, according to Statistics Canada. The decline followed seven consecutive quarterly increases in capacity utilization.

Declines in manufacturing industries, particularly in transportation equipment, were behind the second quarter drop. Capacity use fell in 15 of the 21 major manufacturing industries.

Capacity use in manufacturing declined from 79.6 percent to 78.8 percent during the second quarter, following a 2.8 percentage point increase the previous quarter. However, the second quarter rate remained higher than any rates recorded in 2008, 2009 and 2010.

The transportation equipment industry was by far the biggest contributor to the reduction in capacity use in manufacturing, falling 4.5 percentage points to 79.6 percent, following a 4.1 percentage point increase the previous quarter.

The decrease in the transportation equipment industry was mainly explained by a decline in motor vehicles and parts manufacturing, resulting from supply chain disruptions following the tsunami in Japan in March. Motor vehicles and parts manufacturers sharply reduced production in April, followed by a slight decrease in May. Production started recovering in June, but remained well below March levels.

Other significant contributors to the decline were manufacturers of beverage and tobacco products (down 4.9 percentage points), chemicals (down 1.2 percentage points) and non-metallic mineral products (down 1.7 percentage points).

Capacity use increased in machinery, food, primary metals, computer and electronic products, and furniture and related products, while it remained unchanged in textile product mills.

www.statscan.gc.ca