Canadian capital spending looks to be reviving. Statistics Canada reported Thursday that total capital spending in Canada on plant, equipment and housing should reach the $212 billion mark in 2003.

This would represent a 4% increase from 2002, doubling the increase anticipated in first intentions announced in February.

BMO Nesbitt Burns says that Canadian investment intentions for 2003 have risen significantly since the initial estimate was released in February. “All of the revision was due to increased plant and equipment spending, which is expected to rise by 3.9% this year. Housing investment was unrevised for 2003, with growth of 4.2% anticipated in 2003,” Nesbitt says.

RBC Financial says that if these spending plans come to fruition, it would represent a 4% increase over last year. “The gains are concentrated upon manufacturing as well as oil and gas extraction whereas there are still no indications that IT related investment faces improving prospects. This conforms to our expectations for a changing composition of economic growth that will be more weighted towards rebounding business investment and away from consumer and housing markets,” it says.

Nesbitt says that the last survey was completed while the Kyoto debate was raging, which cast a pall on energy investment. “With Kyoto largely forgotten for the moment and energy prices remaining strong, the oil and gas industry has significantly boosted spending plans,” it says.

“Canadian capital spending appears to be turning the corner, which bodes well for the expected second-half economic recovery. The solid result flies in the face of the recent slide in business confidence,” Nesbitt concludes.

In a separate release, Statistics Canada reported that the leading indicator posted another gain in June, with a 0.3% rise over the previous month which was stronger than consensus expectations for a 0.1% rise.

“Overall, the dynamic duo of stronger housing and equity markets linked up with loose monetary policy to outweigh a slippage in the manufacturing sector and act as portents of better economic growth on the road ahead,” RBC Financial says.