February 28, 2018 / 1:50 PM / a year ago

Canada capital expenditure intentions seen cooling in 2018

OTTAWA, Feb 28 (Reuters) - The pace of capital expenditures in Canada is expected to cool in 2018 as a slowdown in spending intentions from the public sector are offset by increased investment in machinery and equipment, data from Statistics Canada showed on Wednesday.

Total expenditures on non-residential construction and machinery and equipment are expected to rise by 0.8 percent this year after increasing by 3 percent in 2017.

Private sector spending is seen declining by 1.1 percent, though that is not as steep as 2017’s 2.5 percent decrease. Public spending is expected to increase 4.1 percent, decelerating from 2017’s 13.9 percent jump.

Investment in machinery and equipment is seen rising by 3.5 percent this year, driven by the manufacturing and utilities sectors, and picking up from 2017’s 1.4 percent pace.

Among industrial sectors, which include both public and private spending, the oil and gas sector is expected to contract for a fourth year in a row, due to a decline in spending on non-conventional oil extraction.

On the upside, capital expenditure is seen increasing by 6.2 in the manufacturing sector and 6.5 percent in public administration.

Business confidence in Canada has held up relatively well in the face of ongoing North American Free Trade Agreement negotiations, but economists are concerned that recently announced lower U.S. corporate taxes will sap investment in Canada. (Reporting by Leah Schnurr Editing by Chizu Nomiyama)

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