Businesses, governments and institutions intend to allocate more than $223 billion in 2004 for total capital spending on plant, equipment and housing, a 3.1% increase from 2003, says Statistics Canada. This is the first indication that private sector investment will grow since 2001.

“A sample survey of 27,000 organizations shows total capital spending in Canada will reach $223.8 billion, compared with the preliminary total for 2003 of $217.2 billion,” the agency said Wednesday.

Statistics Canada is also reporting that Canadian corporations earned a record $168.3 billion in operating profits in 2003, surpassing the previous high of $165.1 billion earned in 2000.

The banks led the way, along with oil and gas producers, as 16 of the 24 broad industries showed increases, propelling profits 15.1% over 2002 levels. Profits rose 5.6% in 2002. Manufacturers endured a turbulent year, as their profits slipped 9.2%, reversing most of their 2002 gains.

On a quarterly basis, fourth quarter profits rose 3.3% to $42.9 billion, following a similar advance in the third quarter. Profits have now risen for seven of the past eight quarters, following a downturn throughout the four quarters of 2001. The non-financial industries, led by transportation and mining, recorded a 2.5% profit increase, while gains by financial institutions contributed to fourth quarter growth of 5.5% to $11.1 billion in the financial sector for the fourth quarter.

StatsCan says that the depository credit intermediaries (primarily banks) enjoyed a banner year in 2003. Operating profits jumped 58.1% to $18.7 billion, as the chartered banks booked significantly lower loan loss provisions and earned higher net interest income for the year.

The operating profits of insurance carriers climbed to $7.2 billion for 2003, up from $4.6 billion in 2002. Property and casualty insurers registered the largest annual increase, with smaller gains reported by life insurers and reinsurance carriers.

Surging crude oil prices early in the year lifted operating profits of oil and gas producers to an all-time high of $20.4 billion in 2003, up 61.2% from 2002. Wholesalers’ operating profits jumped 28% to $13.3 billion in 2003, following a 12.6% gain in 2002. Retailers reported $10.0 billion in profits in 2003, a 17.2% increase from 2002.

Among the manufacturers, the auto industry saw operating profits tumble to $3 billion in 2003 from $6.4 billion in 2002. Wood and paper producers’ operating profits fell 37.5% to $2.2 billion in 2003, the third consecutive annual profit slide. The primary metals industry saw operating profits tumble 40.5% to $1.4 billion in 2003. However, petroleum and coal manufacturers turned in stellar results for 2003, as prices for refined petroleum products soared early in the year. Operating profits climbed almost 40% to a record $6.7 billion. Electronic and computer manufacturers showed signs of recovery in 2003, as operating profits rallied to $0.2 billion from losses of $1.5 billion in 2002.

In the accommodation and food services industry annual operating profits fell to $1.6 billion in 2003 from $2.1 billion in 2002.

Operating profits of mining companies (excluding oil and gas) increased to an 11-quarter high of $0.6 billion in the fourth quarter from $0.4 billion in the third, as prices for most metals were up. In contrast, oil and gas producers saw their operating profits fall 9.8% to $4.1 billion in the fourth quarter.

The 2003 operating profit margin strengthened to 7.1% from 6.4% in 2002. Meanwhile, the return on average shareholders’ equity gained over two percentage points to 9.8% in 2003 from 7.6% in 2002. The return on equity peaked at 10.9% in 2000. the fourth quarter, the operating profit margin of corporations edged up to 7.2% from 7% in the third quarter. The return on shareholders’ equity slipped to 9.4% from 9.5% in the previous quarter.