Capital spending in Alberta is expected to be near $60 billion in 2019 for the third year in a row, says Statistics Canada.
“Capital spending decreases expected in the mining, quarrying, and oil and gas extraction sector (-4.0 per cent to $27 billion) in 2019 were only partially offset by anticipated increases in the manufacturing sector (+31.5 per cent to $3.7 billion),” said the federal agency on Thursday.
In Canada, capital expenditures on non-residential construction, and machinery and equipment are expected to rise 2.5 per cent to $252.1 billion in 2019, following increases of 4.3 per cent in 2017 and 2.5 per cent in 2018. Growth was led by increases in anticipated capital outlays on construction assets, excluding housing, up 3.2 per cent in 2019 to $164.3 billion. Higher spending on machinery and equipment is also expected (+1.2 per cent to $87.7 billion), stated StatsCan.
“The oil and gas extraction subsector represented 14.6 per cent of capital spending intentions in Canada in 2019. Its share reached a peak of 28.0 per cent in 2014 before declining in 2015 and 2016,” added the federal agency.
Nationally, it said spending could hit record levels in transportation and warehousing in 2019. Capital investment in the transportation and warehousing sector is expected to increase 12.6 per cent to $35.6 billion in 2019.
“Even though capital spending in the mining, quarrying, and oil and gas extraction sector has declined significantly from the record levels achieved in 2014, it is still expected to be the top sector in 2019 in terms of capital expenditures. Growth in 2019 is primarily due to increased mining and quarrying (except oil and gas) spending intentions in Saskatchewan. Capital spending in the oil and gas extraction subsector is expected to remain stable at $36.7 billion in 2019, following an 8.8 per cent decrease in 2018. The completion of several large projects in the non-conventional oil extraction industry caused the decline in 2018, while spending in conventional oil and gas extraction was stable.”
“Canadian decision-makers again spoke cautiously when it came to their 2019 capital spending plans, but there are some positive signs beneath the surface,” said Brian DePratto, senior economist with TD Economics. “It is encouraging to see the private sector taking the lead after two years of only modest increases. As well, it bears noting that the cautious tone over the last few years has not resulted in cautious spending: both 2017 and 2018 outlays came in above survey expectations.
“Indeed, the significant reduction of uncertainty related to NAFTA renegotiations, recent tax incentives, a more cautious Bank of Canada, and tight labour markets all bode well for Canadian investment in 2019. There are certainly downside risks, and the environment in the oil and gas industry will likely be challenging for some time, but it would come as little surprise if Canadian capital spending winds up exceeding survey expectations again this year.”
– Mario Toneguzzi