MRO Magazine

Manufacturing and mining lead decline in production capacity in first quarter


Industry

June 11, 2015
By Bill Roebuck
Capacity utilization in manufacturing was down in the first quarter.

Capacity utilization in manufacturing was down in the first quarter.

Ottawa – Canadian industries operated at 82.7% of their production capacity in the first quarter, down from 83.5% in the previous quarter. It was the largest decline since the second quarter of 2009, reports Statistics Canada.

Manufacturing as well as mining and quarrying were mainly responsible for the decline. Specifically, decreases in capacity utilization in durable goods manufacturing, mining and quarrying as well as construction more than offset increases in non-durable goods manufacturing, electric power generation, transmission and distribution, forestry and logging as well as oil and gas extraction.

Durable goods pull manufacturing downward

Manufacturing industries operated at 82.9% of their capacity in the first quarter, down 0.8 percentage points from the previous quarter. Durable goods manufacturing was the main source of this decline.

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The capacity utilization rate decreased in 12 of the 21 major manufacturing groups, which account for approximately 70% of the manufacturing sector’s gross domestic product.

In the transportation equipment manufacturing industry, the capacity utilization rate fell for the first time in a year, down 3.4 percentage points to 90.7% in the first quarter. Lower production of motor vehicles and motor vehicle parts was the main reason for the decline.

The capacity utilization rate for fabricated metal product producers decreased from 80.0% in the fourth quarter to 76.2% in the first quarter, reflecting lower production in most industry subsectors.

Primary metal manufacturers’ capacity use decreased 4.2 percentage points to 75.6% in the first quarter. An overall decline in production in every primary metal manufacturing subsector was the source of the decrease.

In contrast, every non-durable goods manufacturing industry increased its capacity utilization rate, which partly offset the decrease in the rate for the durable goods manufacturing subsector.

Production was up in most chemical product manufacturing subsectors, resulting in the industry’s capacity utilization rate rising 3.6 percentage points to 83.6%.

The food manufacturing industry increased its capacity utilization rate from 79.8% in the fourth quarter to 80.9% in the first quarter. Production in most of the industry’s subsectors was up, which more than offset the decline in meat product manufacturing and animal food manufacturing.

Mining and quarrying as well as construction decline

A significant decline in support activities for mining and oil and gas extraction resulted in the capacity utilization rate for mining and quarrying falling 5.8 percentage points in the first quarter to 60.9%. This was the largest decrease since the third quarter of 2009.

Capacity utilization in the construction industry decreased for a second consecutive quarter, falling from 84.7% to 83.6%. A decline in non-residential building construction and engineering structures was the reason for this decrease.

The rate for electric power generation, transmission and distribution rose 2.1 percentage points to 87.4% in the first quarter. The increase was attributable to greater demand for electricity as a result of a particularly cold winter in Central Canada.

Capacity utilization in manufacturing is down.