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Institutional and Engineering Work sustain July Construction Starts in Canada

0 1011 Market Intelligence

Alex Carrick

Positions:
Alex Carrick is Chief Economist for CanaData, Reed Construction Data’s Canadian economic forecasting and statistical service.

Economists

On a percentage change basis, CanaData’s year-to-date construction starts figures in July varied little from June. Total starts were -51% in square footage and -29% in dollars. The dollars have been sustained by engineering starts, which are +1% on a year-to-date basis, this year versus same period last year. Much of this has been thanks to government stimulus initiatives. The engineering or civil construction category is made up of projects, such as roads, bridges, sewer pipelines and watermains, where square footage is irrelevant. CanaData is a product line of Reed Construction Data.

On a percentage change basis, CanaData’s year-to-date construction starts figures in July varied little from June. Total starts were -51% in square footage and -29% in dollars. The dollars have been sustained by engineering starts, which are +1% on a year-to-date basis, this year versus same period last year. Much of this has been thanks to government stimulus initiatives. The engineering or civil construction category is made up of projects, such as roads, bridges, sewer pipelines and watermains, where square footage is irrelevant. CanaData is a product line of Reed Construction Data.

Publicly-financed Projects

In the individual month of July, all of the “Top 10” project starts were either institutional or engineering according to type of structure. This illustrates that federal and provincial government money is starting to flow. In the past four months, 35 of the top 40 projects have been of a public nature. This is not typical at all. Looked at from another angle, it is rather shocking to see the degree to which privately-fund construction work has dried up.

Large institutional projects started out being mainly sewer and watermain work earlier this year. Then road and highway projects popped up in the Top 10 lists. Most recently, work at institutions of higher learning is becoming more prominent among construction starts across Canada. Carleton University in Ottawa, Lakehead University in Orillia and Simon Fraser University in Burnaby all started major capital works in the latest month.

By Type of Structure

Institutional starts, which are -16% in square footage and +4% in dollars year to date, are performing relatively best among the non-residential building categories. Commercial starts (-54% in square footage and -49% in dollars) are about half of what they were last year through the first seven months. Industrial starts (-85% in square footage and -88% in dollars) have fallen off the table, although they were not very strong to begin with.

A Comparison with the U.S.

It is interesting that in the United States, the dollar volume declines in non-residential building work (-21.5%) and heavy engineering (+0.1%) have been not that far off what has happened in Canada. In sub-categories, U.S. commercial starts are -31.3% and industrial starts are -20.0%. Both of these figures are considerably better than what Canada is reporting. As for total non-residential starts in the U.S., they are -15% as recorded in dollars, which is almost exactly the same as the -16% figure for Canada. The U.S. starts figures are also compiled by Reed Construction Data (RCD).

Alex Carrick

Find Canadian construction-related economic articles in Canadian Construction Market News and in the Economic Outlook section of Daily Commercial News. Mr. Carrick also has a lifestyle blog that can be reached by clicking here.

by Alex Carrick

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