March 10, 2010
Economic Snapshot
Investment intentions up strongly in Ontario, Quebec and British Columbia
Driven partly by the stronger growth of profits during the second half of 2009 and sustained government spending, investment in non-residential construction and machinery and equipment is projected to increase by 5.3% in 2010. This follows an 11.4% decline in 2009.
The outlook is based on Statistics Canada’s survey of Private and Public Investment Intentions of 28,000 private and public organizations, carried out between October 2009 and late January 2010.
Public sector investment, projected to increase by 9.9% in 2010, is expected to outpace investment by the private sector, anticipated to rise by +2.8%, for the second year in a row, according to the survey.
Most of the increase in planned investment in 2010, approximately 75%, is the result of a 7.2% increase in non-residential construction; the remaining 25% is due to a 2.8% increase in spending on machinery and equipment.
Across the 20 major industrial categories, capital outlays by the public administration sector are projected to increase by an estimated $5 billion (+13%) in 2010, about the same increase recorded in 2009.
Spurred by a healthy 12.8% increase in operating profits in the second half of 2009, spending by firms in the mining and oil and gas extraction sector is projected to increase by 11.6% in 2010 following a 33.1% drop in 2009.
After dropping by 31.5% in 2009, investment spending by manufacturers is projected to increase by 14.6%, largely due to increases in petroleum and coal products manufacturing (+44.5%) and primary metal manufacturing (+44.8%).
According to the survey, investment in non-residential construction is projected to rise in nine of the ten provinces in 2010, the exception being Manitoba.
In absolute dollars, spending in Ontario is projected to increase by $5.5 billion (+8.3%), largely due to increases in public administration and transportation and warehousing.
Following little change in 2009, spending in Quebec is projected to increase by $2.1 billion (+5.2%).
In British Columbia, spending in the wake of the Winter Olympics is projected to grow by a surprisingly strong 4.8%.
John Clinkard has over 30 years’ experience as an economist in international, national and regional research and analysis with leading financial institutions and media outlets in Canada.
Data source: Satatistics Canada/Chart: Reed Construction Data – CanaData.
