Manufacturing capacity utilization (MCU), scored a 80.7% in March, up 2.2% month on month, (m/m), its first month over 80% since October of last year. On a year on year (y/y) comparison, the Canadian MCU was down 3.5%.
Canadian manufacturing sales increased by 2.1% to $58.0 billion in March 2019. Inventories also saw an increase of 1.0% MoM to $86.9 billion, which is the fourth consecutive month it has increased.
According to analysts from FXS, “Manufacturing sales in Canada came in 6 tenths above consensus expectations in March. That impressive result can be traced back to the sales of transportation equipment, which rebounded after three consecutive monthly declines. Even when excluding the sales of transportation equipment (+4.5%), manufacturing sales still rose a noteworthy 1.6% in the month. Part of that rise can be attributed to a third consecutive month of significant increases for the petroleum and coal products industry which jumped 3.2% in volume terms (i.e. excluding price effects in the month).”
Figure 1, charts capacity utilization from 2017 to present. The MCU index is currently over 80%, which is the first time since October 2018. The 2019YTD Manufacturing Capacity Utilization rate is 79.4% compared to 82.2% from 2018.
At Gerdau we regularly monitor the manufacturing capacity utilization date issued by the Federal Reserve because it provides excellent insight into the health of Canada’s manufacturing activity. We know that when manufacturing is performing well, so are steel sales and want to keep you our valued customers and readers informed.