Industrial capacity utilization up in first quarter: StatsCan

Canadian industries operated at 81.1 per cent of their production capacity in the first quarter, up from 80.5 per cent in the previous quarter, according a new report from Statistics Canada.

The first quarter growth followed two quarters of decline. Both the manufacturing and non-manufacturing sectors contributed equally to the advance.

In manufacturing industries, the wood product manufacturing industry leads the increase in capacity use

The manufacturing sector operated at 79.7 per cent of its capacity in the first quarter, up 0.2 percentage points from the previous quarter. The increase followed two quarters of decline.

The capacity utilization rate rose in 12 of the 21 major industry groups, representing approximately 60 per cent of the manufacturing sector.

The largest contributors to the increase in the capacity utilization rate were the wood product, food and chemical product manufacturing industries. Capacity utilization rates declined in nine industries, notably the transportation equipment manufacturing industry where it went down by 2.5 percentage points.

Increased activity in the wood product manufacturing industry pushed its capacity utilization rate up 3.9 percentage points to 87.8 per cent in the first quarter.

In the food manufacturing industry, capacity use rose 1.3 percentage points to 75.4 per cent in the first quarter. Higher production in the grain and oilseed milling industry was largely responsible for the increase.

For chemical product manufacturers, capacity use advanced from 79.5 per cent in the fourth quarter of 2012 to 81.7 per cent in the first quarter, the third consecutive increase. Higher industry output, combined with lower capital stock contributed to the gain.

Lower production of motor vehicles and motor vehicle parts and of aerospace products and parts reduced the capacity utilization rate in the transportation equipment industry. The rate fell from 88.4 per cent in the fourth quarter of 2012 to 85.9 per cent in the first quarter.

Mining, oil and gas extraction was the main source of the overall increase in capacity use in the first quarter in non-manufacturing industries.

Higher crude petroleum extraction boosted the oil and gas extraction industry’s capacity utilization rate, up 1.8 percentage points to 87.4 per cent.

As was the case in the fourth quarter of 2012, an increase in metallic and non-metallic mineral mining pushed the mining and quarrying industry’s capacity utilization rate (+4.7 per cent) upward in the first quarter. The rate rose to 66.0 per cent.

Among non-manufacturing industries, only the forestry and logging industry had a lower capacity utilization rate than in the previous quarter, its first decline since the first quarter of 2012.

The construction industry operated at 80.7 per cent of its capacity, up 0.4 percentage points from the previous quarter. This advance was attributable to growth in all types of construction except residential buildings.

The industrial capacity utilization rate is the ratio of an industry’s actual output to its estimated potential output. For most industries, the annual estimates are obtained from the Capital and Repair Expenditures Survey while the quarterly pattern is derived from output-to-capital ratio series, the output being the real gross domestic product at basic prices, seasonally adjusted, by industry.

This program covers all manufacturing and selected non-manufacturing industries.