Capital spending plans in Canada are still quite robust, despite signs that the U.S. economy is in, or about to enter, a recession. This is the finding of Statistics Canada’s annual survey of Public and Private Investment.

Based on this survey of 28,000 businesses and governments carried out between October 2007 and January 2008, total investment in non-residential construction is projected to increase by 5.2% in 2008, following an estimated increase of 4.5% in 2007.

Underpinning the strengthening of investment is sustained growth of profits due to unprecedented global demand for Canada’s natural resources and raw materials. High commodity prices are fuelling increases in spending on oil and gas extraction (+4.3%) and on related industries such as transportation facilities and pipelines (+23.3%).

Investment in electricity generation by utilities was also up by +8.0%. In addition to solid growth of private sector capital spending (+5.1%), the survey reported that investment by governments, which represents approximately 25% of total investment, is projected to increase by 11.1% in 2008, compared to 17% in 2007.

Across the country, the largest gains in investment spending are projected in Manitoba (18.8%), due in part to a 135% year-over-year increase in transportation and warehousing investment and a 46% year-over-year increase in spending by utilities.

Following almost no growth (+1.5%) in 2007, investment in Saskatchewan is projected to increase by 18% in 2008, largely due to increases in transportation and warehousing. Although not mentioned in the survey, it is known that significant Saskatchewan projects will include the Keystone Pipeline and the Alberta Clipper Pipeline.

In provinces at either end of the country, oil and gas extraction will be the largest contributors to investment spending in 2008. In Newfoundland, drilling by Chevron Resources is scheduled to begin in the Orphan Basin, while in British Columbia, the South Peace Pipeline is scheduled to start in the Northeast Development Region.

In Québec, capital investment is projected to increase by 7.1% or $4 billion. This figure is more, in absolute terms, than any other province. This very large increase is due in part to a $1.7 billion (+27%) increase in public administration investment and a $600 million (+13.4%) rise in utilities spending.

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