The past few years have been very good for corporations in the industrialized world, and Canadian companies are no exception.

This success has allowed companies to clean up their balance sheets and boost their capital investments — a key factor for improving productivity. As well, they still have cash. As of Dec. 31, 2005, business deposits averaged in 2005 were $372 billion, compared with $248 billion three years earlier.

Oil and gas and mining companies have done particularly well, but other sectors also have accumulated substantial cash, according to a Bank of Montreal economics report. Of 30 sectors, 19 had double-digit increases in cash and deposits; only four had declines, although those were substantial.

BMO expects deposit growth in 2006-08 to slow to an average increase of 6.4% from 14.5% in 2003-05. This reflects slower profit growth in the face of somewhat lower resources prices, slower consumer spending and a cooling housing market.

But BMO believes companies will still feel financially secure enough to spend some of their accumulated cash on capital investments, which bodes well for their longer-term prospects. IE