Canadian industries operated at 79.8 per cent of their capacity in the first quarter, down from 81.4 per cent in the previous quarter, said a Statistics Canada report, adding it was the third consecutive quarterly decline.

This decline was because of the slowdown in most sectors caused by physical distancing measures implemented in response to the COVID-19 pandemic, it said.

“The manufacturing sector led this decrease. In the Monthly Survey of Manufacturing, many manufacturers reported that their activities were affected by the COVID-19 pandemic and, to a lesser extent, by the rail blockades that occurred across Canada in February. Since February, a number of manufacturers have reported supply issues. In addition, for some industries, production was slowed and plants were closed in March because of a drop in overall demand and in response to physical distancing measures,” explained the federal agency.

“Following a decline in the previous two quarters, the capacity utilization rate in the mining, quarrying, and oil and gas extraction sector was unchanged at 77.8 per cent in the first quarter.  The capacity utilization rate in the mining and quarrying sector (excluding oil and gas extraction) edged up 0.5 percentage points to 69.9 per cent in the first quarter, following the previous quarter’s decrease. Increased activity levels in support activities for mining and oil and gas extraction and in iron ore mining more than offset decreases observed in the other industry subsectors.

“The capacity utilization rate in the oil and gas extraction sector fell slightly, from 81.8 per cent in the fourth quarter of 2019 to 81.5 per cent in the first quarter of 2020. The COVID-19 lockdown measures led to a drop in overall demand, which in turn led to lower production, except in oil sands extraction.”

StatsCan said that year over year, the capacity utilization rate in manufacturing fell 4.1 percentage points to 74.4 per cent in the first quarter—the lowest rate since the third quarter of 2009. Capacity utilization was down year over year in 17 of the 21 major manufacturing industries, representing roughly 90 per cent of gross domestic product in the manufacturing sector.