The post-pandemic recovery in business investment has been far more robust in the U.S. and other OECD countries than in Canada. Our institute’sat the international data was last July. Those numbers, based partly on forecasts from the OECD, estimated that new capital per potential worker in Canada would be less than $15,000 in 2022, compared to $20,000 in other OECD countries and almost $28,000 in the United States .
That means that, for every dollar of new capital per worker in other OECD countries, a worker in Canada would get about 73 cents, and for every dollar of new capital per U.S. worker, a Canadian would get only 53 cents – a difference that condemns Canadian workers to slower growth in real wages than their counterparts abroad.
The latest news on business investment and capital stock from Statistics Canada puts an ominous exclamation point on the sobering numbers. Capital spending fell in the fourth quarter of 2022, led by a sharp drop in outlays on machinery and equipment. On a per-worker basis, real business investment in Canada is still below its pre-pandemic level. And the real stock of capital per worker has been on a downward trend since 2015 — a deterioration unlike anything since these measures began.
The fossil fuel industry has faced volatile prices and a hostile regulatory environment since 2015, so we might expect engineering construction — the type of capital most closely associated with fossil fuel production and transportation — to be off the most. Yet that is the area that has held up best: the stock of engineering construction per worker at the end of 2022 was almost the same as at the end of 2015.