According to a report from CIBC World Markets, Canadian businesses are poised to take the reins from government and consumers as the leading source of growth in the Canadian economy.
The report notes that while governments, both federal and provincial, are now singing a tune of restraint and consumers are cutting back on spending growth, Canadian businesses are set to ramp up investments in new plant and equipment with a focus on expanding export opportunities.
CIBC said that all three of Canada’s heavy hitters of capital investment, the oil sands, utilities and the manufacturing sector, are expected to add significantly to capacity, ensuring that business investment remains a consistent source of support for the domestic economy, not just in 2011 but also in the coming years.
“By any measure, the current recovery in capital spending is impressive,” says Avery Shenfeld, chief economist at CIBC. “The real return on capital employed is rising and is now currently at just under 6% – a full point above its long term average, and return on equity is now above 12%.”
To read the complete CIBC World Markets report:
click here.
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