This is a post from Alex Carrick's blog that covers the Canadian construction industry.

Since 1985, Mr. Carrick has held the position of Canadian Chief Economist with Reed Construction Data's CanaData, the leading supplier of statistics and forecasting information for the Canadian construction industry.

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Construction Industry Forecasts

Notes from Alex Carrick - Oct 08, 2009

Alex Carrick
More Variety in CanaData’s September Starts Statistics

For the first time in many months, there is a little more variety of projects in CanaData’s Top 10 list of construction starts in September. Mixed in with the institutional and engineering projects which have been dominant since April are a couple of multi-unit residential projects in Quebec City and a commercial project in Alberta. The latter is the Telus World of Science building in Calgary. As for Quebec, its experience of the recession has not been as severe as for many other provinces.

Still, that leaves seven out of 10 projects as either institutional or engineering. These are mainly public works projects that are proceeding as a result of government stimulus money. In the latest month, they are in the categories of roadwork, water treatment plants and educational facilities. School projects currently are predominantly at the level of higher education, to service the children of baby boomers and adults who are looking to upgrade or alter their skill levels.

However, one of the large engineering projects did come from the private sector. It was the ground-breaking on a $1 billion open pit gold mine in la belle province. The world price of gold is setting new records almost daily. As to whether or not this is good news, there are several conflicting viewpoints on that score. It may be part of a movement to higher commodity prices in general. That is what resource-rich western Canada has been waiting for.

Or it may be in reaction to fears that the U.S. dollar is about to embark on a long unpleasant trip downward as a result of Washington’s huge fiscal deficit and the nation’s dependence on foreign oil. The bulk of analytical commentary on the economy has now shifted towards more optimism. There are some overhanging problems in labour markets and underutilized capacity. And there seems little doubt that consumers will remain on the sidelines in the spending game for a while.

But Australia has preemptively raised its central bank interest rate. This is in anticipation of better economic times to come and is also seen as a means to head off inflationary pressures that might develop over the next year or so. The number of analysts who will be speaking about the need for caution in terms of applying additional stimulus to the economy will grow in the months ahead. Many believe that enough government action has already been taken.

In the meantime, the record of construction starts in Canada this year continues bleak. For the January through September period of 2009 versus the same time frame in 2008, commercial building starts are -53% in square footage and -47% in dollars. Industrial starts are -82% in square feet and -87% in dollars. Those are the two highly cyclical and mainly privately-financed categories of construction. In the more public domain, institutional starts are relatively better at -17% in square footage and -7% in dollars. The dollar volume of engineering starts is -16%.

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.


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