Canada’s private and public sector investment intentions to decline in 2016

Private and public sector investment intentions in Canada on non-residential machinery and capital construction are likely to decline this year by 4.4%. This implies that the spending will decrease for the second straight time. Private sector investment spending is expected to fall by 9.3% y/y in 2016, which will mainly drive the decline in spending. Meanwhile, government spending on investment is likely to grow 4.4%.

Spending on oil & gas extraction, mining and quarrying projects is expected to decline by 23.1%, driving most of the drop in private sector. The fall shows a major drop in oil and gas investment that covers around three-quarters of the private sector’s spending.

Non-conventional and conventional oil extraction industries project a drop in capital spending. Out of the 19 remaining sectors, 11 sectors are expected to see declines in non-residential machinery & equipment and construction capital spending in 2016. Most of the drops are likely to be seen in real estate, manufacturing and accommodation and food services industries.

This year, several provinces in Canada anticipate a rise in private-sector investment. PEI and Quebec are expected to lead the rise with 19.1% and 8.6% respectively. Quebec is expected to register a 25.7% growth in transportation and warehousing investment and a 17.3% gain in manufacturing.

In 2016 investment intentions were anticipated to fall as a drop in capital spending on oil and gas extraction projects are a drag on spending plans; however, the spending intentions are little better than projected, said TD Economics. But the survey implies that the numbers have to be taken cautiously, particularly amidst the rapid shifts in domestic and global scenario.