Business Investment Slump Underscores Economic Challenges for Carney Government
A central component of Prime Minister Mark Carney's strategy to rejuvenate Canada's sluggish economy faces significant headwinds, as new data reveals persistent weakness in private-sector investment outside the mining industry. The government's ambitious plan, outlined in its November 2025 budget, emphasized accelerating major nation-building projects through the newly established Major Projects Office to stimulate business investment.
Investment Intentions Paint Concerning Picture
Statistics Canada's annual survey of investment intentions delivers disappointing news for policymakers. Planned investment growth has decelerated for the third consecutive year, reaching just 3.7 percent for 2026. This figure is not adjusted for price inflation, meaning real investment growth will likely be even lower. More troubling is the private sector's planned growth of only 2.8 percent, while public-sector capital spending is projected to increase by 6.5 percent.
This pattern has become entrenched in recent years, with public-sector outlays surging 28.7 percent since 2023 compared to a meager 5.5 percent growth in private investment. The disparity highlights how government spending continues to shoulder the burden of economic activity.
Mining Sector Stands Alone in Private Investment Strength
The mining industry represents the lone bright spot in private-sector investment intentions, accounting for approximately two-thirds of all private spending growth. Record-high prices for metals like gold and copper have spurred investor enthusiasm, with mining projects featuring prominently among the "major projects" approved by Ottawa in recent months.
"Outside mining, private-sector investment remains anemic," the data reveals, with only four of fourteen industries planning higher outlays in 2026. Manufacturing investment intentions have declined for the second straight year, with particularly sharp drops in automotive and primary metals sectors.
External Factors and Policy Misalignment
The decline in manufacturing investment appears partly attributable to shrinking U.S. demand resulting from tariffs implemented during Donald Trump's administration, which specifically targeted automotive and metals sectors. Most service industries also plan reduced investment, including retailers, telecommunications providers, and professional services.
Despite widespread speculation about artificial intelligence transforming economies, there are few indications that AI represents a significant factor in Canadian investment decisions. Meanwhile, government policies continue to emphasize subsidies for electric vehicles and battery plants despite uncertainty about their long-term viability, while overlooking sectors like chemicals manufacturing that have emerged as consistent investors.
The chemical industry has been the largest manufacturing investor in four of the past eight years, including 2026, yet rarely features in public discussions about Canadian manufacturing policy. This disconnect between investment realities and policy priorities suggests potential misalignment in economic strategy.
