Bloomberg News

Canada First Quarter Capacity Utilization Report (Text)

June 14, 2012

The following is the text of Canada’s capacity utilization report for the first quarter released by Statistics Canada.

Canadian industries operated at 80.7% of their production capacity in the first quarter, up 0.2 percentage points from the previous quarter. An increase in capacity use in manufacturing was partially offset by declines in the resource and energy sectors. The increase of 0.2 percentage points followed an advance of 0.8 percentage points in the third quarter and 0.6 percentage points in the fourth quarter of 2011.

Manufacturing: Transportation equipment and machinery industries continue to drive up capacity utilization

In the first quarter, the strength of the manufacturing industries as a whole was responsible for the growth in capacity use of Canadian industries for a second consecutive quarter. Capacity utilization in the manufacturing sector increased 0.7 percentage points to 81.3%. This was the third straight advance since the decline in the second quarter of 2011.

The capacity utilization rate was up in 13 of the 21 major manufacturing industries in the first quarter.

The largest contributors to the increase in the capacity utilization rate were the transportation equipment, machinery, wood product manufacturing and fabricated metal products industries. Capacity use declined in some industries, particularly the computer and electronic product manufacturing industry and, to a lesser extent, the primary metals, food and paper industries.

Demand for motor vehicles and motor vehicle parts raised the capacity utilization rate in the transportation equipment industry by 2.2 percentage points to 89.5%.

Higher production of machinery for the commercial and services industry, as well as the mining and oil and gas extraction industry was largely responsible for the 3.0 percentage point advance in the machinery industry’s capacity use rate, bringing it to 88.5%.

The capacity utilization rate in the wood product manufacturing industry rose from 74.0% in the fourth quarter of 2011 to 77.2% in the first quarter of 2012. The increase was mainly the result of higher production in the sawmills and wood preservation industry.

The fabricated metal products industry reported a 2.2 percentage point increase in its capacity utilization to 81.3% in the first quarter. This advance was primarily attributable to increased activity in machine shops and turned product and screw, nut and bolt manufacturing.

The computer and electronic product manufacturing industry posted the largest decline in capacity use. The industry operated at 86.1% of its capacity, down 5.5 percentage points. The main reason for the decrease was lower production of communications equipment and computer and peripheral equipment.

Non-manufacturing industries: Reduced capacity utilization for the sector

For a second straight quarter, the non-manufacturing sector experienced a decline in its capacity utilization.

Capacity use in the oil and gas extraction industry continued to climb, rising from 89.6% to 90.2%. The construction industry also reported an increase in its capacity utilization rate, from 77.7% in the fourth quarter of 2011 to 78.8% in the first quarter of 2012. The growth was the result of an advance in all types of construction, except non-residential building construction.

However, capacity use decreased for the forestry and logging industry; the electric power generation, transmission and distribution industry; and the mining and quarrying industry.

Increased crude oil extraction was responsible for the 0.6 percentage point increase in the capacity utilization rate of the oil and gas extraction industry to 90.2%, as gas extraction was down.

Reduced activity in the forestry and logging industry accounted for the 3.7 percentage point decline in its capacity utilization rate in the first quarter to 88.0%.

Capacity use in the mining and quarrying industry decreased from 64.2% to 60.3%, largely because of lower production by potash mines and by copper, nickel, lead and zinc ore mines.

The 1.9 percentage point decrease in the capacity utilization rate in the electric power generation, transmission and distribution industry was attributable to reduced demand for electricity because of a mild winter.

Note to readers

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.

At the time of this release, rates have been revised back to the first quarter of 2010 to reflect updated source data.

To contact the reporter on this story: Ilan Kolet in Ottawa at ikolet@bloomberg.net

To contact the editor responsible for this story: Marco Babic at mbabic@bloomberg.net


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