Industry Report
Capital spending may hit record on-residential construction and machinery and equipment (M&E) capital expenditures are projected to hit a record $275.5 billion in 2020, according to Statistics Canada, from $268 billion in 2019, and surpassing the previous peak of $272.1 billion registered in 2014. The 2020 capital investment intentions data, encompassed in the Capital and Repair Expenditures Survey, also marks four consecutive years of growth. The total capital outlays are expected to rise 2.8 percent in 2020, following a 1.7 percent increase in 2019, but off the torrid 9.8 percent increase in 2018. The $7.5 billion anticipated increase is expected to come from growth in capital construction (+4.5 percent to $178.6 billion). But this strong result will be partially offset by a projected small decline in M&E spending (0.2% to $96.9 billion). Capital spending by public sector organizations will be high, with an anticipated increase of 6.5 percent, following a modest increase of 0.8 percent in 2019. More modest growth in capital expenditures on privately held non-residential tangible assets of 0.9 percent is expected in 2020, compared with 2.2 percent in 2019.
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Transportation and warehousing lead Driving the overall capital spending is a 4
record expected $44.3 billion outlay for the transportation and warehousing sector: 9.3 percent higher than that in 2019. For the first time it will become the leading sector for capital investment, surpassing mining, quarrying, and oil and gas extraction, which had been at the top of the rank since 2001. There are projected gains in capital construction (+10.1 percent) and capital M&E (+7.7 percent). Both private and public entities have been and plan to make investments. The largest contributor to growth is a 25.7 percent (+$2.4 billion to $11.8 billion) anticipated increase in transit and ground passenger transportation investment. Significant increases are also anticipated in air transportation (+$1.2 billion to $4.5 billion) and support activities for transportation industries (+$1.2 billion to $10.5 billion). The expected increases are largely concentrated in Quebec (+39.8 percent to $7.6 billion), British Columbia (+16.4 percent to $13.2 billion) and Ontario (+14.4 percent to $11.9 billion). Partially offsetting growth is reduced spending across the Prairie provinces as major investment projects come to an end.
Utilities, public admin to increase Spending in the utilities sector is expected to increase by 9.1 percent to $33 billion in 2020, driven by increases
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in the water, sewage and other systems subsector (+30.5 percent to $7.6 billion) as major projects in British Columbia and Ontario get underway. Furthermore, increased investment in electric power generation, transmission and distribution in Alberta and Ontario will more than offset the completion of major projects in Newfoundland and Labrador and in Manitoba. Similarly, capital spending in the public administration sector is expected to grow by 2.3 percent (+$783 million to $34.4 billion): a turnaround from a drop of 0.6 percent in 2019. Spending increases in local, municipal and regional public administration (+$2.3 billion to $18.3 billion) are expected to more than offset declines in federal government public administration spending (-$1.5 billion to $4 billion).
Non-renewable resource extraction outlays to drop Capital outlays in the mining, quarrying, and oil and gas extraction sector are anticipated to continue their decrease, albeit at a slower rate. Statistics Canada reports that it expects to see 1.4 percent decline (-$636 million to $43.7 billion) in 2020, after reporting drops of 8.3 percent (-$4 billion) in 2019 and 4.3 percent (-$2.2 billion) in 2018. The anticipated decline in 2020 is
