Canadian manufacturing reached its highest capacity utilization rate in the second quarter since 2019. IMAGE courtesy Stellantix
The capacity utilization rate in the manufacturing sector rose 1.4 percentage points year-over-year to 78.5% in the second quarter, according to Statistics Canada records.
This is the highest capacity utilization rate in the manufacturing sector since the second quarter of 2019. Year over year, capacity utilization increased in 13 of the 21 major manufacturing industry groups, representing approximately 60% of gross domestic product in the manufacturing sector.
Transportation equipment manufacturing experienced its third consecutive quarterly gain in its capacity utilization rate, rising to 73.1% in the second quarter. The rate remained lower than that recorded in the fourth quarter of 2019 (83.0%). Despite a resumption in activity since the COVID-19 pandemic, motor vehicle manufacturing continued to face a shortage of semiconductor chips and retooling at some assembly plants.
Machinery manufacturing recorded a year-over-year increase in its capacity utilization rate of 2.7 percentage points to 79.1% in the second quarter. Higher levels of activity were observed in agricultural, construction and mining machinery manufacturing (+7.1%) and in industrial machinery manufacturing (+4.3%). This capacity utilization rate increase in machinery manufacturing coincided with a significant improvement of growing conditions for agricultural products in the Prairies compared with 2021.
In the second quarter, the capacity utilization rate among petroleum and coal product manufacturers was 84.7%, up 3.1 percentage points year over year. Despite the gradual easing of the health measures related to the pandemic, concerns about the global economic slowdown led to a decrease in energy demand. A decline in activity level was observed in petroleum refineries (-3.5%), whose capacity utilization rate was lower than in the previous quarter (90.1%).
Offsetting the overall increase in the manufacturing sector, wood product manufacturers recorded a year-over-year decline of 2.1 percentage points to 84.0% in the second quarter. The decline in residential construction and the weak construction activity in the United States contributed to lower demand for Canadian wood products.