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.

Go to Alex Carrick's blog home

Construction Industry Forecasts

Notes from Alex Carrick - Aug 11, 2009

Alex Carrick
Summer Review of Non-residential Building Construction Outlook in Canada

Privately-funded non-residential building construction in Canada is in a deep trough at this time. The only exception is institutional work, where governments are going ahead with school projects and health care/hospital work. The latter is due to the aging population. The former is mainly at the level of higher education. That is where the children of the baby boomers are still adding to the student population. Another factor is the need for continuing education. Adult workers, whether thrown out of their jobs or facing the prospect of falling behind due to the pace of technological change, are going back for re-schooling.

Office-based employment has been declining and this has been raising vacancy rates in downtown skyscrapers. The one bit of good news is that, except in Toronto and Calgary, there was little overbuilding of office space in the recent good times. The recession has caused shoppers to reduce the number of their trips to the mall and this has limited investment in retail projects. Low product demand, a rising Canadian dollar and exceptionally weak capacity utilization rates are putting manufacturing investment on the back burner. In fact, the manufacturing sectors in Canada and the United States have been losing jobs at alarming rates to low-labour-cost producers in emerging nations.

It is not clear that China will continue to be the country of choice for outsourcing manufacturing jobs. Wages in China, while still low relative to rich nations, have been on an upward path. Also, there is the matter of shipping costs. As world economic activity builds again, and especially as oil prices rear up, the cost of ocean shipping will move quickly higher. This has already become apparent in the Baltic Dry Index, a measure of moving cargo over world seagoing shipping lanes. It is compiled in London, England.

Nevertheless, there are plenty of other countries that will be able to provide cheap labour. As commodity prices increase − and copper and nickel have already shown a tendency in that direction − this will be positive for investment in Canada’s raw materials sector. Aluminum and precious metals, as well as potash and uranium, will all receive a boost from world economic recovery. This will take a year or so to really get underway.

The Square Footage Forecasts

The most recent peak for non-residential building starts in Canada occurred in 2007 at 92.1 million square feet. They fell to 75.0 million in 2008 and are expected to be only 47.5 million in 2009. 2010 will also be relatively quiet at 57.5 million, before moderate strength returns in 2011 at 70.0 million. This shows the wide swings that can occur.

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.


Email

RSS Feed

» back to blog home

Member Comments

Post Your Own Comments 
» Not a member? Register now to become one. Otherwise, login to post your comments on this article.

Read Other Recent Alex Carrick Posts

10/12 - Latest Economic Nuggets: Mid-October 2012
10/04 - Auto Sales Set a Blistering Pace in the U.S. and Canada
09/18 - Canada’s Energy Future is Assured, Right? Think Again
09/14 - Latest Economic Nuggets: Mid-September 2012
09/06 - Auto Sector Labor Relations will Play a Role in Construction Outlook
08/30 - Raucous Behavior in the Party Room Next Door
08/13 - Latest Economic Nuggets: Mid-August 2012
07/31 - Canada’s GDP Advanced a Timid 0.1% in May but Support Will Come from Better U.S. Home Prices
07/19 - Finding the Pearls in the Latest U.S. and Canadian Economic News
07/13 - Latest Economic Nuggets: Mid-July 2012
07/04 - U.S. Auto Sales Continue Bullish While Canadian Incomes Languish
06/28 - Three Pivot Points for the World Economy - U.S. Housing, Europe’s Conundrum and Oil Prices
06/14 - Economic Nuggets – June 15, 2012
06/06 - Canada’s First Quarter GDP Growth Met Expectations, But What Comes Next?
05/30 - Ontario has a Backbone of Strength for the Decade Ahead
05/14 - Economic Nuggets - May 15, 2012
05/11 - Canada Rode a Second Consecutive Month of Strong Job Gains in April
05/04 - U.S. Employment Rose by a Mediocre 115,000 in April
04/27 - U.S. GDP +2.2% in Q1 2012 and Alberta led Canadian Provinces in 2011
04/18 - U.S. Inflation Low in March; Canada’s Central Bank Looking to Raise Rates

click here to update your log-in and member information

click here to maintain your company profile & view metrics