LATEST NEWS 
December 27, 2006
Economy
Buildings a big part of fixed assets
By the end of this year, Canada will have more than $3.1 trillion in structures and equipment in use to produce goods and services for the economy. Three-quarters of the total consist of building and engineering structures and about one-quarter is machinery and equipment.
A decade ago, this ratio was closer to two-thirds for structures and one-third for machinery and equipment.
The past decade has seen gross fixed assets increase by 26 per cent at constant 1997 values. Building and engineering structures were about $2.3 trillion in gross fixed assets.
“What has happened over the last four years is we have seen double digit increases in machinery and equipment, and that was stimulated by the reduced price of imports, because we import a lot,” said John Clinkard, consulting economist with CanaData.
“That increase was also helped by the decline of the Canadian dollar versus the U.S. currency.”
In the building and engineering structures, the business sector accounted for almost three-quarters of the assets at $1.6 trillion, while public administration, education, health and social assistance accumulated $662 million.
“Engineering construction sort of spurted, pre-millennium. There was a big surge coming up 2000, but it has strengthened in the last few years, largely driven by infrastructure programs in the west through highways, bridges and the oil sands,” said Clinkard.
“Building construction has been relatively weak. It was in decline in 2003 and 2005, and it tends to lag, but it has started to pick up in 2006 and will remain healthy in 2007.”
Clinkard added a moderation in machinery and equipment assets as well as engineering will see a peaking of the cycle, and there will be some easing back as the industry heads into 2008.
The report released by Statistics Canada announcing the gross fixed assets for non-residential was considered “history” and did not tell economists anything they did not already know.
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