MNI DATA ANALYSIS: Canada 3Q Mfg Capu Falls Below L-T Average>

By Yali N'Diaye

     OTTAWA (MNI) - Canadian industries operated at 82.6% of their 

production capacity in the third quarter, their lowest level in a year, 

on widespread decreases in the manufacturing sector, data from 

Statistics Canada showed Wednesday. 

     Outside the manufacturing sector, lower prices for Canadian heavy 

crude oil led to cuts in non-conventional oil production. As a result, 

oil and gas extraction industries operated at 84.2% of their capacity in 

the third quarter, down from 85.4% the previous quarter. 

     Wednesday's data only reinforce the odds of the Bank of Canada 

remaining on hold at its January meeting as it monitors the impact of 

lower oil prices on the economy, as well as the evolution of economic 

capacity. 

     "There may be additional room for non-inflationary growth," the BOC 

said in its December 5 policy statement. Wednesday's data confirmed just 

that. 

     Still, the industrial capacity utilization rate remained above its 

long-term average of 82.2%, and the third quarter decline came after 

five consecutives quarters of gains. 

     --MANUFACTURING BELOW LONG-TERM TREND 

     Instead, the capacity utilization rate in the manufacturing sector 

fell below its long-term average of 81.0% in the third quarter. It was 

down 2.9 percentage points to 78.8%, its largest drop since the first 

quarter 2009 and its lowest level since the first quarter 2017. 

     Decreases were widespread, with 18 of 21 manufacturing industries 

operating at a lower capacity than the previous quarter, representing 

90% of the sector's production. 

     On a year-over-year basis, declines were also widespread, across 16 

of 21 manufacturing industries. 

     The decline was led by chemical products, which operated at 75.6% 

of their capacity, down 10.0 percentage points from the previous 

quarter. 

     Transportation equipment was down 6.6 points to 80.5% as auto plant 

shutdowns during the summer weighed on production. 

     Meanwhile, the capacity utilization rate for petroleum and coal 

increased by 11.8 points to 89.1%, as production resumed gradually 

following temporary shutdowns and maintenance work at several 

facilities, the agency said. 

--MNI Ottawa Bureau; email: yali.ndiaye@marketnews.com

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