Alex, on Apr 22 you said new construction would fall by 4.7% in 2009.  Your may 7 article talks about a 52% drop in ICI.  How do you reconcile the two numbers and where do you think it is going to end up by the end of the year?

The -4.7% figure is a “put-in-place” figure. Investment or put-in-place numbers are much smoother than starts numbers.

CanaData records the total value or square footage of a start at the time ground is broken. Put-in-place numbers are like progress payments. They are recorded as the project goes up. Therefore, swings in the first series are much wider than swings in the second.

The easiest way to think of this is in terms of a $60 million office building. It goes into the starts as a “lumpy” $60 million at once. But it goes into investment dollars (in a hypothetical example) as $20 million in the first year, $30 million in the second and $10 in the final year. Peaks in cycles have a large number of “lumpy” starts. Then there is carry-over investment work for some years after that.

The investment number comes from Statistics Canada’s survey of owners. It is reported in the publication Private and Public Investment in Canada. I would say that it is too optimistic. A decline in spending of 10% to 15% seems more likely.

The -50% figure for ICI (industrial, commercial and institutional) starts would seem to be a relatively realistic measure of what is currently happening in the marketplace. Privately-financed work is drying up. There may be some moderation in this decline (say to -40% by the end of the year), due to public projects in the institutional category.  Alex Carric