February 25, 2005

Majority of increase for construction, says StatsCan

Jump in business investment expected in 2005

OTTAWA

Business investment should take off this year, says Statistics Canada.

“Robust profits, high oil prices, infrastructure im- provements and an increase in manufacturing investment should all combine to produce the largest boost to investment intentions in recent years,” the agency said Wednesday.

Businesses expect to increase investment by 8.4 per cent this year to $188.3 billion, a lift that will come just as spending on housing appears to be levelling off.

Business and housing investment together should increase six per cent to $258.6 billion, the agency said.

“Housing is expected to remain virtually unchanged in 2005 at just over $70 billion.”

The agency also reported that actual figures for 2004 indicate investment was stronger than forecast.

Total investment should reach $243.9 billion, an increase of 8.5 per cent and much stronger than the 3.1 per cent gain originally expected for 2004. The largest contributor was housing, up 14 per cent to just over $70 billion.

Governments are also expected to spend more. Local spending should rise 18.9 per cent and provincial government spending by 10.8 per cent.

“In both cases the majority of the increase will be for construction.”

For 2005, oilsands projects will lead the increases, the agency says.

“The non-conventional oil extraction industry, buoyed by prices that ensure the feasibility of many new projects, is the largest contributor to growth in the mining and oil and gas sector with an increase of $2.4 billion.

“This increase, combined with just over $1 billion from the conventional industry and another $562 million from mining, will help push the sector up 12.2 per cent to $37.7 billion.”

Manufacturing investment, which has been lacklustre for several years, appears ready to reverse that trend.

“Manufacturing investment is expected to increase 14.9 per cent to $22.1 billion.”

It will be driven by a 36.6 per cent increase in investment in refineries, a 60.8 per cent hike in investment in wood products and a 23.7 per cent rise in chemical manufacturing investments.

Utilities are expected to increase investment by 13.1 per cent to $15.4 billion.

The Canadian Press

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