According to the just-released Statistics Canada survey of public and private investment intentions, total capital spending plans (capex) declined in 2009 for the first time since 1992.

This overall decline was caused exclusively by a 13.1% decline in private-sector capital spending plans. This decline more than offsets a 9.5% increase in public-sector spending plans.

Across the 20 major industrial sectors covered by the survey, roughly half of the year-over-year drop in private-sector investment plans occurred in the oil and gas extraction sector, where plunging energy prices and shrinking demand caused firms to cut their spending by just over $16 billion. That figure is down 26% compared to 2008.

In 2009, spending in the conventional oil and gas extraction industry is projected to drop by an estimated 25%, to $21.3 billion. Meanwhile, the non-conventional side of the industry (largely Alberta oilsands) should see spending fall by 31%, to $13.2 billion.

In addition to mining and oil and gas extraction, capex intentions in 2009 also dropped sharply in manufacturing (-8.5%), in accommodation and food services (-37.7%), in retail (-7.5%) and in agriculture and forestry (-5.2%). Despite the extremely hostile investment climate, firms in the transportation and warehousing industry indicated they planned to boost their 2009 capex spending by 2.9%, following a 9.5% increase in 2008.

The one bright spot in the 2009 capital spending outlook is public-sector investment. Based on survey information gathered between October 2008 and January 2009 ahead of the federal budget, the three levels of government planned to increase their spending by a total of 9.5% in 2009. This rise follows an increase of 22.3% in 2008.

However, when the additional spending on infrastructure projects broadly outlined in the federal budget is factored in, public sector spending should increase by almost double the originally projected percentage increase.

Despite this increase in public-sector investment, total capex will still decline compared to 2008. However, the extent of the pull back is considerably less than it would have been without the significant increase in infrastructure spending contained in the budget.