Non-residential Capital and Repair Expenditures, 2015 (revised), 2016 (preliminary) and 2017 (intentions)
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Capital spending on non-residential tangible assets is anticipated to edge up 0.8% in 2017, following two consecutive annual declines. Expenditures by private sector organizations have been decreasing annually since 2014, while spending by public sector organizations has risen.
Public and private sector organizations anticipate spending $240.5 billion on non-residential tangible capital assets in 2017, edging up 0.8% from 2016. This increase is attributable to higher spending on non-residential capital construction.
Capital spending by public sector organizations is expected to increase 4.9% in 2017, following a 10.9% gain in 2016. Organizations in the private sector are anticipated to decrease spending by 1.6%. The anticipated gain in expenditures for public sector organizations is attributable to higher spending on both capital construction projects and machinery and equipment.
Higher spending anticipated in the oil and gas extraction subsector in 2017
Capital spending for organizations in the oil and gas extraction subsector is expected to increase by 2.3% in 2017, following two consecutive years of decline. The anticipated gain is largely attributable to an increase in capital construction projects in the conventional oil and gas extraction industry.
Overall, three provinces are expected to account for over 90% of the spending in the oil and gas extraction subsector in 2017. Spending in Alberta is projected to increase 2.4%, from $24.7 billion in 2016 to $25.3 billion in 2017, but still below the levels reached from 2010 to 2014. Capital spending is expected to increase by $1.1 billion in Saskatchewan to $3.2 billion in 2017, while in British Columbia, expenditures are anticipated to rise by $510.9 million to $5.0 billion. The anticipated rise in spending in the three provinces is largely attributable to higher spending on capital construction projects.
Industrial sectors summary
Among the 20 industrial sectors, 7 anticipate higher spending on non-residential tangible capital assets in 2017. The largest increase is projected in the public administration sector, where spending is expected to rise from $32.3 billion in 2016 to $35.5 billion in 2017. The expected increase in spending for the sector is attributable to higher spending by the local, municipal and regional and provincial, territorial public administration subsectors.
Capital spending in the real estate and rental and leasing sector is projected to rise by $983.1 million (or +8.0%) to $13.3 billion in 2017, largely as a result of spending increases in Ontario and Quebec. Spending in Alberta is forecasted to fall by $662.4 million (or -23.1%) for the sector.
Total capital expenditures in the transportation and warehousing sector are expected to increase by $499.4 million (or +1.7%) to $30.4 billion, largely as a result of higher expenditures in the transit and ground passenger transportation subsector.
Spending is expected to fall by $705.7 million (or -4.4%) in the manufacturing sector to $15.2 billion, largely as a result of lower expenditures on non-metallic mineral product manufacturing and petroleum and coal products manufacturing.
Provinces and territories summary
Total capital expenditures are expected to rise in five provinces and territories in 2017. The largest increase in total spending is expected in Ontario (up $2.7 billion to $70.6 billion), attributable to higher spending in the transportation and warehousing, public administration as well as real estate and rental and leasing sectors.
Following closely is Quebec, with an anticipated increase in spending of $1.8 billion to $38.3 billion in 2017, mainly due to higher spending in the public administration, health care and social assistance, utilities, and real estate and rental and leasing sectors.
In British Columbia, capital expenditures in non-residential tangible assets are expected to rise 3.4% to $28.5 billion, as a result of increased spending in the public administration, mining, quarrying, and oil and gas extraction and transportation and warehousing sectors.
Total capital expenditures are forecasted to fall by $1.8 billion in Newfoundland and Labrador to $8.4 billion in 2017, mainly as a result of lower spending in the mining, quarrying, and oil and gas extraction sector.
Spending is anticipated to decline by $1.2 billion in Alberta in 2017 to $60.9 billion, mainly as a result of lower spending in the transportation and warehousing, real estate and rental and leasing, educational services and manufacturing sectors. However, spending in the mining, quarrying, and oil and gas extraction sector in the province is projected to increase.
Capital expenditures continue to fall in 2016
Preliminary data from private and public sector organizations suggest a continuation of the downward trend in spending on non-residential tangible capital assets in 2016. Overall, organizations reported a 5.0% decline in expenditures, from $251.3 billion in 2015 to $238.7 billion, attributable to lower spending by private sector organizations.
Strong decreases were reported in mining, quarrying, and oil and gas extraction, manufacturing and accommodation and food services sectors.
In 2016, capital expenditures on non-residential tangible assets fell in six provinces and territories. Provincially, declines occurred in Alberta, Saskatchewan, Ontario and Newfoundland and Labrador. Organizations in Alberta recorded the largest decline, with expenditures down $13.6 billion to $62.1 billion, mainly as a result of lower spending in the oil and gas extraction subsector.
Spending on non-residential tangible capital assets declined in 2015
In 2015, West Texas Intermediate crude oil prices, which started relatively low at US$52 per barrel, ended the year below US$40 per barrel, the lowest price since early 2009. The movement in crude oil prices coincided with changes in other economic activities, limiting economic growth to 0.9% from 2014, the lowest annual change in real gross domestic product since 2010.
Against this backdrop, public and private sector organizations spent $251.3 billion in 2015 on non-residential tangible capital assets, down 7.6% from 2014. This marked the first decline in spending on non-residential tangible capital assets since 2009. The decrease was largely attributable to a steep reduction (-15.9% or -$22.9 billion) in expenditures on engineering construction assets.
Conversely, capital expenditures on non-residential building construction assets rose 6.3% to $48.2 billion in 2015, the first increase since 2012.
Higher spending on machinery and equipment, an important component of productivity, has been weak since 2010, falling by 0.9% in 2015, following a 6.5% gain in 2014.
Capital spending down in engineering construction
In 2015, spending fell in seven of nine engineering construction asset groups, led by the oil and gas engineering construction (-$18.7 billion) asset group. Other engineering (-$2.0 billion), electric power (-$1.7 billion) and mining engineering construction (-$1.1 billion) also declined. Higher spending on transportation engineering (+$1.8 billion) and marine engineering infrastructure (+$192.0 million) asset groups did not offset the overall decline.
Capital expenditures on intellectual property products
Capital expenditures on oil and gas and mineral exploration fell again in 2015, down 26.5% to $5.4 billion. The decline was largely attributable to lower spending in Alberta, British Columbia and Saskatchewan.
In 2015, exploration drilling for oil and gas, which accounted for half of capital spending for oil and gas and mineral exploration, fell 40.1% to $2.7 billion. Similarly, spending on mineral exploration declined 9.9%, while geological, geophysical, and other exploration and evaluation costs for oil and gas rose 7.4% from 2014.
Capital spending on software rose 11.3%, from $8.0 billion in 2014 to $8.9 billion in 2015. Overall, spending was up in eight provinces and territories, led by Ontario (+$796.6 million), Quebec (+$166.0 million) and Nova Scotia (+$74.1 million). Alberta (-$196.4 million) recorded the largest drop in spending on software.
Capital spending on non-residential construction and machinery and equipment, provinces and territories
Note to readers
The Capital and Repair Expenditures Survey for non-residential construction and machinery and equipment, revised estimates for 2015, preliminary estimates for 2016 and intentions for 2017 is based upon a sample survey of 25,000 private and public organizations. The survey was conducted from September 2016 to January 2017.
Data in this release are expressed in current dollars.
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