Industrial capacity utilization rates down for fifth consecutive quarter

Industries cut their use of production capacity for the fifth consecutive quarter to 79.4% in the third quarter, Statistics Canada reports.

Capacity use fell 2.5 percentage points from a revised 81.9% in the second quarter, the largest single-quarter decline on record. The largest previous decline occurred in the fourth quarter of 1990, when the capacity utilization rate fell 2.3 percentage points.

The third quarter rate was well short of the most recent high of 86.6% posted in the second quarter of 2000.

The rate fell because of slumping demand in the high tech sector and, to a lesser extent, lower demand for automotive products.

Rates of capacity use dropped in all the groups making up the industrial aggregate: forestry and logging; mining and oil and gas extraction; electric power generation, transmission and distribution; construction; and most of the industry groups in the manufacturing sector.

Manufacturers operated at 77.4% of their capacity in the third quarter, down 2.6 percentage points from the second. Of the 21 major groups in the manufacturing sector, 16 had lower rates. The drop in manufacturing was largely driven by declines in computer and electronic products, automotive products, chemicals, wood products, and paper products.