BUSINESS

Canadian Businesses Pull Way Back On Spending Plans

07/06/2015 08:57 EDT | Updated 07/06/2016 05:59 EDT
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Amid a growing debate over whether or not Canada is in a recession, a new survey from StatsCan provides more ammunition for those who say the country is headed into a slowdown.

Capital expenditures in Canada will shrink for the first time since the Great Recession, numbers from a new StatsCan survey show.

The agency's survey of spending intentions by businesses and governments on non-residential construction, machinery and equipment shows spending down by 4.9 per cent this year.

That would mark the first time capital expenditures have fallen in Canada since 2009, when the world was in the grips of a financial crisis.

Statistics Canada says capital spending this will fall to $251.8 billion this year. The survey predicts the private sector will reduce spending by 7 per cent this year, while government spending will be flat, falling a slight 0.2 per cent.

The federal agency says according to its survey, spending by the mining, quarrying, and oil and gas extraction sector is expected to fall 18.7 per cent to $67.9 billion.

Capital spending by organizations in the health care and social assistance sector is expected to go down 14.2 per cent from 2014 to $8.7 billion this year, while the professional, scientific and technical services sector is expected to slip 23.2 per cent to $2.0 billion.

The transportation and warehousing sector is expected to show the largest growth this year. The sector is expected to increase spending $3.1 billion to $26.4 billion, largely as a result of pipeline transportation, and transit and ground passenger transportation.

Manufacturers plan to increase spending by 2.7 per cent to $17.5 billion this year.

Economists at Bank of America Merrill Lynch and Nomura Securities, among others, asserted last week that Canada's economy shrank in the second quarter, following a 0.6-per-cent decrease, at an annual rate, in the first quarter, meaning the country is in a recession.

But Finance Minister Joe Oliver downplayed those reports, saying the government doesn't expect the country to fall into recession.

And several economists have suggested that Canada may see a "technical recession," in which GDP will shrink for two straight quarters, thanks to shrinking oil revenue, but will avoid a widespread slowdown.

They note that Canada's residential construction market remains strong, and the slowdown is largely limited to the oil-exporting regions of the country.

The Huffington Post, with files from The Canadian Press

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