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U.S. mining, exploration investment declined 35% in 2015

Mining and exploration investment as a share of total private investment declined from 5.2% in 2014 to slightly more than 3% in 2015

Mining and exploration investment declined 35 per cent in 2015, the second largest year-over-year decline since the U.S. Bureau of Economic Analysis (BEA) began reporting the series in 1948.

mining

Source: U.S. Energy Information Administration, based on U.S. Bureau of Economic Analysis Note: Based on fourth-quarter and annual 2015 advance estimate of gross domestic product, which is subject to revision. SeeBEA’s caution on the use of chained-dollar estimates.

 Most mining and exploration investment reflects petroleum exploration and development, but the category also includes natural gas, coal, and other minerals.

Mining and exploration investment declined from $135 billion in 2014 to $87.7 billion in 2015, weighing down investment growth more than any other segment of nonresidential investment.

Total private fixed investment, of which mining and exploration is a small subset, grew 4 per cent in 2015 to $2.7 trillion.

Low commodity prices remain a significant factor in U.S. firms’ investment decisions.

U.S. gross domestic product (GDP) grew 2.4 per cent in 2015, according to fourth-quarter and annual 2015 advance estimates by BEA, the same rate as in 2014. Gross private domestic investment contributed 0.8 per cent to the 2.4 per cent GDP growth in 2015.

BEA tracks several types of private investment, broadly split into residential and nonresidential.

Within nonresidential are three categories: equipment (such as industrial and transportation equipment), intellectual property products (such as software and entertainment), and structures (which includes mining and exploration but also commercial, manufacturing, power, and communication structures).

mining

Source: U.S. Energy Information Administration, based on U.S. Bureau of Economic Analysis Note: Based on fourth-quarter and annual 2015 advance estimate of gross domestic product, which is subject to revision. SeeBEA’s caution on the use of chained-dollar estimates.

Mining and exploration investment as a share of total private investment declined from 5.2 per cent in 2014 to slightly more than 3 per cent in 2015.

Low oil prices remain a major factor in oil exploration and production firms’ decisions to reduce capital expenditure.

Fourth-quarter earnings statements from U.S. oil companies indicate plans to further reduce capital expenditure to balance spending with lower cash flows until crude oil prices increase enough to make investments economic.

These oil-company reductions could continue to put downward pressure on investment spending in the broader U.S. energy sector.

mining

Source: U.S. Energy Information Administration, based on U.S. Bureau of Economic Analysis Note: Annual shares calculated using nominal dollars.

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