Economy rising 10.7%, retailing among major gainers
24 Mar '06
4 min read
Business investment led growth in the fourth quarter, driven by rising commodity prices, according to the review of current economic conditions that appears today in the Canadian Economic Observer.
Business investment consolidated its place as the most dynamic sector of the economy, rising 10.7% in 2005. This was its largest gain since early 1998.
Moreover, firms intend to invest 9% more in 2006 than they did in 2005, with energy and transportation leading widespread gains.
The most striking turnaround has been in non-residential construction investment. It has risen 10.6% in the past four quarters, a strong recovery from declines posted as recently as the previous year.
This upswing was evident in both engineering (driven by the energy sector) and building.
Firms plan to step up investment in plant and equipment the most in the Prairie provinces. Manitoba leads the way in investment intentions with a 16% advance.
Manufacturing is driving this increase, up 61%, followed by mining, utilities and transportation. Capital spending in utilities has nearly doubled over the last two years, powered by projects to supply electricity to Ontario.
The booming oil and gas sector fuelled higher capital spending plans in Alberta and Saskatchewan. In Alberta, the recent surge in development of the oilsands led to a sharp increase in pipelines this year to carry the output of these projects to market.
Ontario was next with an 11% forecast increase in business investment. Over one-third of the hike was in utilities as the province grappled with a shortfall of electric power generation.
marketing@alchempro.com
