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Sub-sector investment spending intentions from Statistics Canada's latest survey

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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 following are some key sub-sector results from Statistics Canada’s 2010 Public and Private Investment survey. Capital spending intentions by 28,000 owners in the private and public sectors were collected and tabulated between October 2009 and late January 2010. The grand total national figure projects a 5.1% gain in capital spending on construction between 2009 and 2010.

The following are some key sub-sector results from Statistics Canada’s 2010 Public and Private Investment survey. Capital spending intentions by 28,000 owners in the private and public sectors were collected and tabulated between October 2009 and late January 2010. The grand total national figure projects a 5.1% gain in capital spending on construction between 2009 and 2010.

Owners among mining and oil and gas extraction companies reported that they intend to invest 10.3% more in 2010 than in 2009. This will make 2010 a partial recovery year. In 2009, owners in this sector dropped their investment spending by nearly one-third (-32%). Job-site work in this sector is mainly categorized to engineering construction.

Last year’s drop was mainly due to oil and natural gas price declines. The world price of oil peaked in July 2008 at $145 USD per barrel. Then it fell to a low of $30 USD per barrel in early 2009. The global oil price has since recovered about one-half of its peak-to-trough decline.

Construction investment by utilities will increase 1.9% in 2010 versus 2009. This will almost all be engineering work. There may be some pipeline work in here as well as electric power projects.

The wholesale trade investment figure is -23.9%, coming out of commercial construction.

Retail trade construction spending, however, is expected to increase 5.9%. Retail construction suffered along with the recession, but not to the same degree as many other categories. Even in the worst of times, individuals and families have to spend on food, clothing and school supplies.

Transportation and warehousing construction investment (-1.2%) will be essentially flat in 2010 versus 2009. Activity levels in this sector depend on retail trade, foreign trade and manufacturing.

Educational services expect an increase in construction investment of 5.6% in the current year. This seems a little low given the extent of government stimulus spending that is going into this institutional category of construction.

Even more surprising is the 8.0% decline projected for the health care and social assistance sector. This may be modified upward depending on whether or not a mega hospital project or two is started in Montreal. This is medical centre work to be connected with the city’s major universities.

Art, entertainment and recreation construction investment will be -20.1% and accommodation and food services will be -2.7%. These come under the commercial category of construction. It will be another year or so before the impacts of the recession are completely put behind us in terms of having the confidence to be free with leisure-time spending.

It’s no surprise that public administration construction spending is expected to increase 16.7%. This will be on government office buildings in the commercial category and on some institutional public assembly buildings.

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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