Canadian industries operated at 81.7% of their production capacity in the Q4 2022, down from 82.2% in the Q3. This downturn in the Q4 was primarily attributable to declines in the mining, quarrying, and oil and gas extraction sector, according to Statistics Canada.
The capacity utilization rate of forestry and logging sector reached 75.3% in Q4, down 2.6 percentage points from Q3. In the paper manufacturing sector, capacity utilization decreased 1.3 percentage points to 83.9% in the Q4.
Following two consecutive quarterly increases, capacity utilization in the mining, quarrying, and oil and gas extraction sector fell 2.3 percentage points to 79.7% in the Q4 2022. This decline was driven by scaled-back operations, particularly in oil sands extraction. Crude oil production was curbed by an oil spill from the Keystone pipeline in Kansas, which is used to export crude oil to the United States.
In the construction sector, capacity utilization rose 0.9 percentage points to 91.3% in the Q4. Increased activity in engineering construction more than offset the decline in residential construction. According to the Labour Force Survey, the employment level in construction rose from 1.53 million in the Q3 to 1.58 million in the Q4.
In the Q4, the capacity utilization rate of wood product manufacturing sector down 2.0 percentage points to 78.5%
Slight uptick in the capacity utilization of manufacturing
The capacity utilization rate in the manufacturing sector edged up 0.2 percentage points to 76.8% in the Q4. Capacity utilization increased in 11 of the 21 major manufacturing industry groups, representing approximately 60% of gross domestic product in the manufacturing sector.
In the Q4, the capacity utilization rate of transportation equipment manufacturers rose 1.0 percentage points to 75.7%. This advance coincided with increased activity in the miscellaneous transportation equipment manufacturing (+17.5%) and motor vehicle parts manufacturing (+2.4%) subsectors.
Year 2022 in review
In 2022, the industrial capacity utilization rate posted a second consecutive annual increase after a decline in 2020. The capacity utilization rate reached 81.9% in 2022, up 0.9 percentage points from 2021.
Oil and gas extraction rose 2.0 percentage points to 81.0% in 2022. Stronger activity was observed in gas extraction (+7.4%) and oil sands extraction (+2.2%).
The manufacturing sector saw an annual increase of 0.9 percentage points in the capacity utilization rate to 77.1% in 2022. Capacity utilization saw annual growth in 14 of the 21 major industry groups.
Among the industries that contributed to the overall gain in manufacturing, transportation equipment manufacturers saw their capacity utilization rate increase 4.6 percentage points to 73.4% in 2022. Although the supply chain issues observed in 2021 persisted in 2022, global supply chains began to see improvement, and, as a result, automakers were affected less.
The annual capacity utilization rate of petroleum and coal product manufacturers was up 2.7 percentage points to 86.3% in 2022. A gradual increase in travel activity contributed to the rise in demand for transportation fuels.
The construction sector saw its capacity utilization edge down 0.5 percentage points to 91.3% in 2022. The decline was driven by weaker activity in residential building construction (-5.7%) after interest rates gradually rose in 2022.
