Non-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.

Transportation and warehousing lead
Driving the overall capital spending is a 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 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 largely attributed to lower spending intentions in the metal ore mining subsector (-$1.1 billion). In contrast, the oil and gas extraction subsector, which represents about 77 percent of the anticipated spending in 2020 for the sector, reported an expected increase of 1.3 percent. Within this subsector, the non-conventional oil extraction industry anticipates gains of $1.1 billion in capital spending, which is partially offset by the expected decrease of $633 million in the conventional oil and gas extraction industry.

Manufacturing outlays to increase
Manufacturers anticipate a 1.2 percent increase in capital spending in 2020 to $22.4 billion, due to a 3.1 percent increase in spending on capital M&E. Non-residential capital construction is anticipated to decline 3.6 percent in 2020, following increases of 14.5 percent in 2019 and 47 percent in 2018.

Out of 21 manufacturing subsectors, 11 reported an expected increase in total capital outlays for 2020, compared with 12 in 2019 and 17 in 2018. Quebec is expected to increase its spending by $474 million (+9.8 percent) in 2020, offsetting anticipated declines in Alberta, Manitoba and Ontario.

B.C. to lead, Newfoundland and Labrador to fall
British Columbia is among the provincial leaders contributing to the national increase anticipated in 2020. New capital spending is expected to increase $3 billion (+7.8 percent) for a total of $41.8 billion. Notable advances in investment also took place in 2019 (+21.1 percent) and 2018 (+10.5 percent).

Increased spending is nothing new for British Columbia, said Statistics Canada; 2020 marks the fifth consecutive year spending is set to increase.

Gains in the transportation and warehousing sector (+$1.9 billion) and the utilities sector (+$861 million) will easily offset, it said, reduced spending in the agriculture, forestry, fishing and hunting sector (-$185 million) and the mining, quarrying, and oil and gas extraction sector (-$109 million).

Meanwhile capital investment in Quebec has been growing since 2014 and shows no signs of slowing down, with a planned spending increase of 7.3 percent to $46.4 billion in 2020. Spending in the province is anticipated to increase by $3.1 billion in 2020, with $2.2 billion coming from the transit and ground transportation subsector. The manufacturing, utilities and accommodation and food services sectors are also expecting increases in 2020.

In Ontario, capital spending is expected to increase by 4.1 percent to $86.1 billion, following an increase of 1 percent in 2019 and an increase of 18.6 percent in 2018.

Spending is anticipated to increase in several sectors, namely transportation and warehousing (+14.4 percent to $11.9 billion), utilities (+10.1 percent to $11.8 billion) and public administration (+6.7 percent to $12.7 billion). But the manufacturing sector is expected to decline to $102 million (-1.2 percent) in 2020, after a decrease of $489 million (-5.3 percent) in 2019.

In sharp contrast, Newfoundland and Labrador is anticipating the largest provincial decline in spending in 2020 (-$834 million to $6.2 billion), following an increase in 2019 (+$396 million to $7 billion). Utilities (-$475 million) and the mining and quarrying, except the oil and gas subsector (-$389 million) represent the majority of the decrease expected for 2020.

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