Capital expenditures decrease in non-res construction, machinery, equipment: Stats Can report

Capital expenditures across Canada in non-residential construction and machinery and equipment are expected to total $251.8 billion in 2015, down 4.9 per cent from 2014 according to a recent Statistics Canada study.

Public sector capital spending is expected to decrease 0.2 per cent and private sector capital expenditure is anticipated to fall by 7.0 per cent, mainly as a result of lower spending in the mining, quarrying, and oil and gas extraction industry, the study predicts.

Capital expenditures in the mining, quarrying, and oil and gas extraction sector are expected to total $67.9 billion, 18.7 per cent less than in 2014.

In 2015, capital expenditures on exploration and evaluation, which include oil and gas exploration drilling, geological, geophysical and other oil and gas exploration and evaluation costs as well as mineral exploration costs, are expected to fall 25.1 per cent from 2014 to $6.8 billion.

Organizations in the mining, quarrying, and oil and gas extraction sector reported that capital expenditure in construction and machinery and equipment is expected to fall by $15.6 billion, or 18.7 per cent, to $67.9 billion in 2015. The mining, quarrying, and oil and gas sector is still expected to be the largest capital spending sector, accounting for more than one-quarter of total capital expenditure.

The conventional oil and gas extraction subsector is projected to represent most of the decrease in the sector, as its capital spending is expected to decline by $8.0 billion to $30.5 billion. The non-conventional oil extraction subsector is expected to fall by $5.0 billion to $25.1 billion, the study notes.

In 2015, three provinces are anticipated to account for most of the decline in capital spending in the mining, quarrying, and oil and gas extraction sector. In Alberta, capital spending in the sector is expected to decline by $12.0 billion or 21.4 per cent to $44.0 billion. Capital spending in Saskatchewan is projected to drop by $2.2 billion or 24.3 per cent to $6.9 billion, while capital spending in British Columbia anticipated to decline by $1.4 billion or 21.1 per cent to $5.2 billion.

The largest provincial increase for the mining, quarrying, and oil and gas extraction sector is anticipated to be in Newfoundland and Labrador, where capital expenditure is expected to rise by $86 million or 1.6 per cent to $5.4 billion.

Provincially, Alberta is expected to remain the largest contributor to the mining, quarrying, and oil and gas extraction sector, representing 64.8% of total capital expenditure.

Other industrial sectors

Strong decreases in capital expenditures in non-residential construction and machinery and equipment were reported by a number of sectors. Capital expenditures by organizations in the health care and social assistance sector are anticipated to total $8.7 billion in 2015, down 14.2 per cent from 2014. The hospital subsector is expected to account for 80.8% of the decrease.

Capital expenditure in the professional, scientific and technical services sector is expected to decline 23.2 per cent to $2.0 billion. This decline is anticipated to partly come from the architectural, engineering and related services subsector, which is expected to account for almost 30 per cent of the total decrease.

Overall, capital spending in the transportation and warehousing sector is expected to show the largest growth in 2015. Spending in this sector is anticipated to increase $3.1 billion to $26.4 billion, largely as a result of higher capital spending on pipeline transportation, and transit and ground passenger transportation.

Capital outlays by the public administration sector are anticipated to increase 0.8 per cent to $31.6 billion.

Manufacturers intend to increase spending by 2.7 per cent to $17.5 billion in 2015, in large part, due to increases in the petroleum and coal product manufacturing subsector in Alberta, and the machinery manufacturing subsector in Quebec.

Capital spending is anticipated to increase by 9.7 per cent for educational services, mainly as a result of higher of spending in the community colleges and CEGEPs subsector.

Provincial Summary

In 2015, capital expenditures on non-residential construction and machinery and equipment are expected to decline in Alberta, Saskatchewan, British Columbia, Ontario, Newfoundland and Labrador, Yukon and Nunavut, the CARE report predicts.

Capital expenditures for 2015 are expected to be down in Alberta, as a number of projects in the oil and gas extraction industry have been suspended. The expected value of private and public capital spending is forecast to be $82.0 billion, down 11.0 per cent from 2014.

In Saskatchewan, capital expenditures are expected to total $15.5 billion, down 12.9 per cent. The decline is due to lower spending in the mining, quarrying and oil and gas extraction sector.

Organizations in Quebec reported the largest increase, with capital expenditures expected to increase by 2.7 per cent to $37.3 billion, mainly as a result of higher capital spending by the public administration sector.

Capital expenditures are expected to rise 4.5 per cent to $10.0 billion in Manitoba, where spending in the utilities sector is anticipated to increase by $507 million to $2.9 billion. As well, spending by the provincial public administration subsector is expected to rise by $158 million to approximately $1 billion.

In Nova Scotia, capital expenditures on non-residential construction and machinery and equipment are expected to rise 9.2 per cent to $4.0 billion, as a result of increased spending in the local, municipal and regional public administration subsector.