MNI DATA IMPACT: Canada Q4 Factory Use is Lowest Since 2010>

By Greg Quinn and Anahita Alinejad

     OTTAWA (MNI) - Canadian factories worked at the lowest rate in a 

decade in the fourth quarter, showing weakness even before the 

coronavirus led the central bank to cut interest rates last week. 

     Capacity utilization declined in 13 of 21 manufacturing categories, 

taking the rate down to 77.7%, Statistics Canada said Wednesday 

from Ottawa. The rate was 78.3% in the third quarter and 79.1% a year 

earlier.

     Chemicals, metals and machinery showed some of the biggest declines 

over the quarter and the last year. Reduced production of farm products 

cut chemical capacity use to 73.6%, down 2.4pp over the quarter and by 

7.9pp from a year earlier. 

     Some weakness was linked to disruptions such as a railway strike 

and a damaged crude oil pipeline, Statistics Canada said. The economy 

nearly stalled in the fourth quarter and the Bank of Canada said as it 

cut rates by 50bp March 4 that the first half of 2020 will be soft 

because of fading underlying demand and pressure from the spread of the 

COVID-19. 

     The overall capacity utilization rate declined to 81.2% from 81.5% 

in the third quarter, still ahead of the MNI median estimate of 80.8%. 

     Mining and quarrying fell 3.2pp to 68.2% on lower demand for potash 

and rail disruptions that roiled shipments. The 1.1pp rise in oil and 

gas capacity use to 81.5% was limited by damage to the Keystone 

pipeline. 

     Foresty and logging, a separate category from manufacturing, 

dropped to the lowest since 2009. The industry's capacity use was 

66.1%, down 8.5pp on the quarter and 13.3pp from a year earlier.

     Construction capacity use slipped from a two decade high, down 

0.4pp to 90.8%. 

--MNI Ottawa Bureau; +1-613-314-9647: greg.quinn@marketnews.com

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