Led by California and Texas, twenty states account for more than 75% of the US construction market. The projected recovery in the construction market early next year must be driven by a significant improvement in a large share of these key states. A pickup in construction activity in the thirty smaller states would not be sufficient to set off a national market recovery, says Reed Construction Data chief economist Jim Haughey.

CanaData’s latest construction starts forecasts are set out in the tables that accompany this report. The current year will see non-residential building starts in Canada drop to about half the level that they reached two years ago in 2007, 45.5 million square feet versus 92.1 million. The credit crunch, reduced international travel, lower world trade and high unemployment are all factors holding back privately-funded construction projects at this time. What is perhaps most remarkable, however, is the fact that interest rates remain so low in Canada and throughout the industrialized world. In no way are interest rates inhibiting factors with respect to investment.

The construction materials price index fell 0.2% in October but remains 0.5% higher than three months ago. The price trend ahead is for modest increases into the winter and then larger monthly increases for the rest of 2010. Monthly price changes into the winter will more likely be up than down but the net price rise will be small until domestic demand for construction materials is again rising steadily, says Reed Construction Data chief economist Jim Haughey.