Industrial capacity utilization

Industrial capacity utilization dropped steeply in 2008 and 2009, from 84.6% in 2007 to 73.5% in 2009, due to dramatic drops in business and consumer demand for goods in the face of falling corporate profit and per capita disposable income. Demand increased post-recession and industrial capacity utilization rose in response to higher demand for industrial products in domestic and foreign markets. Consequently, there was growth in capacity utilization in 2010 and 2011. In 2012, capacity utilization growth remained flat as the economy adjusted to new structural realities and increasing consumer debt. In 2015 and 2016, industrial capacity utilization declined 2.0% and 1.6%, respectively. The collapse of commodity prices diminished industrial activity in mining, quarrying, construction and oil and gas extraction industries. However, in 2017, capacity utilization trended upward as activity increased in response to a moderately higher price outlook and adjustments were made to operate in the new lower price environment. Industry capacity utilization continued increasing in 2018 to its highest level since 2007. This growth was short lived however as industrial capacity utilization fell in 2019 amid global trade tensions.

The COVID-19 (coronavirus) pandemic of 2020 further affected this metric as demand for many products fell considerably and plants adjusted accordingly. Production facilities also needed to adjust production lines to follow social distancing protocol, leading to less efficient operations. As a result, capacity utilization fell below 80.0 percent for the first time since 2016 during 2020. However, in 2021 and 2022, as facilities began to open back up and the domestic economy began its economic recovery, the industrial capacity utilization increased 5.2% and 0.4%, respectively. Despite surging inflation and rising interest rates, Canada has experienced steady consumer demand for goods. Though the Bank of Canada announced during the spring of 2023 that it had decided to pause interest rate hikes for the foreseeable future, it reversed course during the summer and announced multiple quarter-point hikes in June and July. As a result, industrial capacity utilization growth decreased 1.4% during the year. Despite the Bank of making cuts during the year, the industrial capacity utilization remained flat during 2024. Over the five years to 2025, the industrial capacity utilization is expected to increase at an annualized rate of 1.3% to reach 81.1%, as the recession experienced during the pandemic period combined with the economic expansion which occurred during the post-pandemic period have offset each other.