Industrial capacity utilization rates rise

Sept. 15, 2010 – Canadian industries operated at 76.0% of their production capacity in
the second quarter, up 1.6 percentage points from the previous quarter.
This was the fourth consecutive quarterly increase.

Since the record low of 68.1% set in the second quarter of 2009, the
industrial capacity utilization rate has risen by 7.9 percentage points
to 76.0%.

The strength recorded by Canadian industries as a whole was driven by
both the manufacturing sector, which saw its rate climb from 75.0%
to 76.7%, and the non-manufacturing sector.

Most manufacturing industries post gains

Capacity use was up in 16 of the 21 major manufacturing industries.

Capacity use in total manufacturing increased 1.7 percentage points
in the second quarter to 76.7%. Although this was the fourth consecutive
gain, the increase fell short of the advances recorded during the
previous three quarters.

Industries contributing to the higher rate for total manufacturing were transportation equipment, primary metal, machinery manufacturing and wood product manufacturing.
The transportation equipment industry operated at 66.6% of its capacity in the second quarter, up 2.1 percentage points from the previous quarter. Growth in the industry's capacity use was a result of higher production by manufacturers of motor vehicles and motor vehicle parts and manufacturers of railroad rolling stock.

In the primary metal manufacturing industry, the utilization rate
increased 5.1 percentage points from the previous quarter to 90.9%.
Appreciable gains in production were posted by all metal manufacturing
industries except alumina and aluminium production and processing.

Machinery manufacturers used 74.2% of their production capacity, up
from 71.0% in the previous quarter. Higher production of agricultural,
construction and mining machinery, industrial machinery, and commercial
and service industry machinery was behind the gain in capacity use.

Capacity utilization by the wood product manufacturing industry
advanced from 74.4% to 78.1%. The main contributing factor was higher
production by sawmills and by veneer, plywood and engineered wood
product manufacturers.

Declines in computer and electronic product manufacturing (from 95.2%
to 89.8%) and chemical manufacturing (from 82.6% to 81.5%) slowed the
growth of the manufacturing sector.

Non-manufacturing: Capacity use continues to rise in most sectors

In the non-manufacturing group, capacity use advanced in all sectors
except electric power generation, transmission and distribution.

In the forestry and logging sector, capacity utilization
rose 9.9 percentage points from the previous quarter to 89.9% in the
second quarter.

The oil and gas extraction sector also increased its capacity use
from 77.2% to 81.5% over the same period. This gain reflects higher
crude petroleum extraction activity, which more than offsets lower
activity in natural gas facilities.

The mining extraction industry increased its capacity use from 66.3%
in the first quarter to 69.0% in the second quarter, mainly as a result
of copper, nickel, lead, zinc and potash extraction activity.

Capacity utilization in the construction sector edged up from 72.1%
to 72.9%, as production in residential construction rose 2.8%.

In the electric power generation, transmission and distribution
sector, the utilization rate fell from 77.8% in the first quarter
to 75.6% in the second quarter. Demand for electricity was down 2.1% in
the second quarter from the first quarter.