Capital spending to fall two per cent

REGINA — Saskatchewan will see capital spending drop by two per cent to about $20.5 billion in 2013 from $20.9 billion in 2012, according to Statistics Canada’s survey of public and private sector investment intentions.

Excluding residential construction, capital spending is expected to fall by 2.7 per cent to $16.8 billion this year from $17.3 billion in 2012, the federal agency said. “The anticipated 2.7 per cent decline is largely attributed to to a $525 million decline in manufacturing,’’ StatsCan said.

“In 2013, investment in non-residential construction and machinery and equipment is expected to increase in every province and territory except New Brunswick, Saskatchewan, British Columbia, and the Northwest Territories.”

By contrast, Saskatchewan saw a 6.5 per cent jump in capital spending in 2012 from $19.6 billion in 2011, driven partly by strong residential construction spending. Excluding residential construction, capital spending increased 4.5 per cent last year over $16.5 billion in 2011.

Across Canada, corporations appear to be taking a wait-and-see approach to capital investments this year, a position that could dampen already modest expectations for economic growth in 2013.

The annual survey indicates capital spending will rise a mere 1.7 per cent to $398.2 billion this year — the slowest non-recession pace since 1995 and well down from 7.2 per cent last year.

Private sector spending intentions were even softer at 0.8 per cent, while government investment is expected to rise by five per cent, which has been about the average over the last two decades.

With consumers tapped out, governments restraining overall spending and the housing market cooling, the Bank of Canada has pinned its projection for two per cent growth this year on both a rebound in exports and on business investment.

But the turnaround for exporters has yet to materialize and the Statistics Canada survey suggests that business is generally unwilling to bet on expansion in the current global economic climate.

Overall, the agency survey found a broad-based hesitancy to invest this year, with nine of 21 sectors saying they would likely spend less than in 2012.

Education is expecting the biggest decline at 7.7 per cent, but in terms of impact on the economy, the most negative finding was the 2.7 per cent drop in intentions in the mining and oil and gas industries.

On the positive side of the ledger, transportation and warehousing, retail and the finance and insurance sectors all said they expected to hike spending.

Housing, another key sector in terms of its contribution to growth, came in just above zero at 0.2 per cent.