(July 28 – 09:45 ET) – The technology sector will lead the Canadian economy in growth through 2000 and 2001, although high oil and gas prices will bolster the energy sector, economists said today.

Canadian Imperial Bank of Commerce economists said tech industries will expand at annual rates of 23.5% this year and 11.7% in 2001. Oil and gas will expand by 5% annually while energy services such as drilling are expected to expand 30%.

A slowing U.S. economy is expected to hit the auto and other transportation equipment businesses, leaving their growth below the industry average of 3.6%, although the level of production will remain high. Textiles and clothing will also suffer.

“Canada’s industry output will slow down to about 3% in 2001 from about 4.3% this year,” said Josh Mendelsohn, CIBC’s chief economist.

“This really should not come as a surprise given that the U.S. Federal Reserve is trying to engineer a soft landing. Having said that, there will continue to be underlying strength in some sectors of the Canadian economy even as the U.S. slows, reflecting both cyclical and secular factors. The technology sector, for instance, is benefiting from the tremendous ongoing demand for the infrastructure needed to extend the Internet and build fibre-optic and wireless networks worldwide. As well, oil and gas and some metals are benefiting from a strong price environment that is likely to continue over the next year or more.”

CIBC classifies above-average industries as: electronic products (23.5%, average annual growth for 2000 and 2001); communications (11.7%); business services (7.5%); crude petroleum and natural gas (4.7%); exploration services (27.0%); and metal mining (2.2%).

The bank sees late-cycle strength in construction (4.8%)and machinery (4.5%). Industries with rising market shares that are relatively resistant to the effects of the U.S. downturn include furniture and fixtures (6.7%) and plastics (6.5%).

The below average performers will be industries that are highly vulnerable to the U.S. slowdown such as wood products (3.0%) or transportation (1.7%) and as well as industries constrained by capacity, such as pulp and paper (2.5%). Also facing pressure are industries facing competition from low-cost imports such as primary textiles (-7.0%) and clothing (-1.7%) or publicly-funded industries such as health and social services (0.3%).

-IE Staff