April 21, 2008
Economy at a Glance, April 22, 2008
Construction starts in first-quarter 2008 are not encouraging
CanaData’s construction starts statistics in first-quarter 2008 versus first-quarter 2007 were decidedly weak. Grand total starts (i.e., residential, plus ICI, plus engineering) for the country as a whole were -25% in square footage and -18% in dollar volume. Furthermore, every construction category showed a downturn, some considerably steeper than others.
So far this year, total Canada residential starts have been -23% in square footage and -24% in dollars versus the same period last year. The “singles” market (-10% in units) is consistent with what Canada Mortgage and Housing Corporation (CMHC) has been saying. However, CanaData’s “multiple-unit” starts (-41% in units) have declined so far this year versus CMHC’s increase of nearly one-third. CanaData may have recorded the starts at an earlier point in time. For all of 2007, CanaData had multiple-unit starts at 16%, whereas CMHC’s figure was only 3%.
Total non-residential building (ICI) work has been -28% in square footage and -19% in dollars year to date, according to CanaData. The smallest decline among the ICI sub-categories has been recorded by commercial work (-18% in square feet and -5% in dollars).
The institutional (-41% in square feet and -33% in dollars) and industrial (-58% in square feet and -54% in dollars) categories were quite soft. Total engineering construction starts were -6% in dollar terms.
In summary, one has to look hard to find encouraging numbers in the latest set of statistics. The only categories and regions where there have been significant increases were commercial work in Alberta and engineering activity in Manitoba and British Columbia. The latest building permit figures from Statistics Canada also show a marked falling off. It appears that concerns about the cross-border impacts of U.S. slowdown/recession have put a halt, hopefully temporarily, on capital spending plans.
As for the ten largest project starts in March, Alberta was the most active province with four. Ontario and British Columbia accounted for three projects each. By type of structure, the engineering and commercial categories accounted for three projects each and commercial and institutional work provided two projects each.
For more articles by Alex Carrick on the Canadian and U.S. economies, visit his blog and Market Insights.
Trend Lines of Construction Starts in Canada - March 2008
Moving Totals of the Latest 12 Months*
(CanaData Figures)
+ICI is the sum of industrial, commercial and institutional. *For example, the March 2008 figure is the sum of the monthly figures for April 2007 through March 2008. The prominent jumps in the engineering curve reflect such mega projects as the $10.8 billion Horizon Oil Sands project in Alberta (March 2005 start), the $1.9 billion Canada Line LRT project between Richmond and Vancouver in B.C. (January 2006 start) and the Eastmain 1-A hydroelectric power project in northern Québec June 2007 start). Data source and chart: Reed Construction Data - CanaData.
