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CanaData's Construction Starts Statistics are -49% in Square Feet through August

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Alex Carrick

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Alex Carrick is Chief Economist for Reed Construction Data. He specializes in economic forecasting and statistical services.

Economists

The pattern of construction starts in Canada in August 2009 was a continuation of what it has been throughout most of this year. A trend graph clearly points out what has been happening in the market-place. Non-residential building starts, which are mainly privately-financed, are experiencing a long slide that began early in 2008. Engineering starts, which are mainly publicly-funded, have been moving upward since the midway point of last year, although they appear to have leveled off over the past several months.

The pattern of construction starts in Canada in August 2009 was a continuation of what it has been throughout most of this year. The trend graph (click here for link) clearly points out what has been happening in the market-place. Non-residential building starts, which are mainly privately-financed, are experiencing a long slide that began early in 2008. Engineering starts, which are mainly publicly-funded, have been moving upward since the midway point of last year, although they appear to have leveled off over the past several months.

The foregoing is not to take away from the strength in public-sponsored work. In CanaData’s Top 10 starts lists each month, 45 of the biggest construction projects out of the last 50, going back to April, have been either institutional or civil projects. Once again in August, almost all (9 out of 10) of the largest starts were in those two categories. The civil work is mainly roads, bridges and water-treatment related and the institutional work, so far, has been primarily of an educational nature – new facilities at academies of higher learning.

Year-to-date starts overall are -49% in square feet and -36% in dollars. These numbers slightly overstate the non-residential decline, since residential work is down by half. Commercial starts are -54% in square feet and -49% in dollars, while industrial is an alarming, but not surprising, -84% in square feet and -88% in dollars. Industrial work has been under assault on many fronts, from weak North American auto demand and falling Canadian home starts, through a Canadian dollar that is moving upward versus the U.S. greenback.

By comparison with commercial and industrial starts, institutional work is hanging in fairly solidly. This is due to government stimulus money starting to have an effect. Institutional starts are -20% in square feet and -10% in dollars. Engineering work, which is only measured in dollars, is -24% this year to date versus January to August of last year. The public spending is coming at a time when tax revenues are being curtailed by the recession. This is already creating problems for some provincial treasurers.

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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