Canada Capacity-Utilization Rate Climbs in 1Q to 81.7%

06/11/2021 | 09:10am

By Paul Vieira

OTTAWA--Canada's industrial capacity utilization rate rose in the first quarter, reaching a level just shy of prepandemic levels, driven by gains in construction and the commodity sector.

Overall, industries in Canada operated at 81.7% of their production capacity in the first quarter, or a two-percentage-point advance from 79.7% in the previous quarter, Statistics Canada said Friday. Market expectations weren't immediately available.

The first-quarter capacity-utilization rate came just below the 82.1% in the fourth quarter of 2019, or the last three-month period before the pandemic struck North America and forced authorities to impose economic and social-distancing restrictions. Capacity utilization has surged since hitting a virus-induced low of 71.9% in the second quarter of last year.

The capacity-utilization rate represents a ratio of industry's actual output to its estimated potential output. It is also a gauge of how much slack, or spare capacity, there is in the economy. The gauge covers Canada's industrial sector and doesn't incorporate services.

The data agency said the strength in commodity prices, most notably energy products, and preliminary indicators from the construction sector point toward the capacity-utilization rate increasing again in the April-to-June period.

In the construction sector, capacity utilization rose to 92.4%, or the highest rate since 1990. This was attributed to home building, as the real-estate market has been on a roll since the depths of the pandemic. The rate for mining rose to 83.4% in the first quarter, a nearly nine-percentage-point jump from the previous quarter, and jumped to 77.5% for oil-and-gas extraction.

As for manufacturing, the capacity-utilization rate dipped slightly from the previous quarter, to 76.5%, reflecting disruptions in the motor vehicle and parts component due to a shortage of semiconductor chips.

Write to Paul Vieira at paul.vieira@wsj.com

(END) Dow Jones Newswires

06-11-21 0909ET

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