A new report suggests Canada’s resource boom is a leading factor in growth in sectors across the economic spectrum.
In the Conference Board of Canada and the Business Development Bank of Canada’s Canadian Industrial Profile – Spring 2012, predicted growth in the manufacture of electrical equipment, fabricated metal products and machinery among its forecasts.
The profile shows forecasts over the next five years as determined by the Conference Board of Canada (CBoC) and Business Development Bank of Canada (DBC).
“It is interesting to note that the economic boom linked to oil and gas and mining activities is benefiting many industries – not only in Western Canada, but throughout the country,” said BDC vice president of economic analysis Pierre Cléroux. “In addition to the positive impacts related to the dynamism of the oil and gas and mining sectors, businesses in many manufacturing sectors are performing well thanks to the growth in exports to the U.S. – a first since the end of the recession. Despite the strong dollar, which is an ongoing challenge to the competitiveness of businesses, and the uncertainty created by the eurozone debt crisis, the outlook is positive for many Canadian entrepreneurs.”
With the price of oil expected to remain high, staying above $100 per barrel, profits in oil and gas support activities are expected to double in 2012 after growing nearly fourfold between 2009 and 2011. The latest Canadian Industrial Profile warns, however, that competition and a shortage of qualified labour could keep profit margins from ballooning.
Demand for professional services, including architecture, engineering, accounting and legal services among others, is predicted to rebound following a decline in profits of nearly 30 per cent in 2011. That rebound will be fueled in no small part by mining investment, which will bring about more need for architects and engineers.
“Driven by high commodity prices, investment in the Canadian mining industry continues to grow at a robust pace. In addition to boosting the support activities for oil and gas industry, this investment boom will stimulate demand for machinery, fabricated metals and architecture and engineering services,” said CBoC director of industrial economic trends Michael Burt.
Machinery manufacturing is expected to reach pre-recession levels, with growth in exports to the United States and domestic demand leading the sector’s profits to exceed $1.9 billion in 2012, while exports of electrical equipment to non-U.S. markets and growth in non-residential projects are expected to continue to bear fruit in that sector. Profits in electrical equipment doubled in 2011 and are forecast to grow by more than 26 per cent to $443 million.
Fabricated metal products are expected to grow more modestly over the long term due to a lack of investment in emerging markets, but the sector is still predicted to do well, with the forecast calling for profits to exceed $1.5 billion.
While the Canadian economy has yet to recover fully from the global financial crisis, with work in the oil sands continuing to grow Canada’s mining industry strong, the latest forecast suggests that the future in many of the country’s industry segments is bright indeed.
