Investment in equipment, machinery and construction for B.C.’s mining, quarrying, and oil and gas sectors is expected to drop dramatically in 2015.
Survey data released Monday (July 6) from Statistics Canada reveals capital expenditures in those sectors are pegged to fall by $15.6 billion, or 18.7%, across Canada to $67.9 billion in 2015.
B.C., along with Alberta and Saskatchewan, will lead the country in declines as capital expenditures falls 21.1% to $5.2 billion in 2015 for the West Coast province.
“The survey was conducted from October 2014 to January 2015, which was right in the heart of the oil price correction. Given that oil prices have remained at a relatively low level through the first half of the year, actual investment tied to the sector could be even weaker,” TD economist Dina Ignjatovic said in an investors’ note.
She added it’s unlikely oil prices will rebound like they did during the previous correction in 2009. Instead, investment in engineering construction “should remain subdued” for the next 12-18 months.
Total spending is expected to fall 4.9% compared with 2014, as capital expenditures in health care and social assistance decline 14.2% to $8.7 billion.
Despite these declines, the mining, quarry, and oil and gas sectors still account for the largest portion — 27% — of the $251.8 billion the country is expected to invest throughout 2015.
And Canada will also experience boosts from other sectors.
Capital spending in transportation and warehousing is expected to grow $3.1 billion to $26.4 billion, while manufacturers intend to boost spending 2.7% to $17.5 billion.
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