August 7, 2008

Rising materials costs contribute to higher levels of non-residential construction investment

VINCE VERSACE

staff writer

A recent Statistics Canada report says rising material costs are contributing to higher investment figures in non-residential construction.

The report revealed that rising construction prices contributed to a 0.9 per cent increase, measured in current dollars, in investment in non-residential building construction in the second quarter of 2008. Taking into account these higher material prices, investment in non-residential construction actually declined 3.7 per cent in 2002 constant dollars, Statistics Canada reports in a July analysis.

“The numbers are all relative,” says Michael Atkinson, president of the Canadian Construction Association. “It all really depends on what measuring stick you are using.”

Investment reached $10.5 billion between April and June with spending on medical facilities and office buildings leading the way.

All three areas of ICI experienced increased investment.

The commercial sector saw a 0.8 per cent increase to $6.5 billion, industrial went up 1.6 per cent to $1.5 billion and institutional increased by one per cent to $2.6 billion.

Six provinces recorded second-quarter gains with Alberta, Ontario, Quebec and Saskatchewan leading the way. Ontario reached $3.9 billion in investment, up from 3.8 billion in the first quarter, Alberta $2.6 billion from $2.5 billion, Quebec $1.75 billion from $1.7 billion and Saskatchewan $294 million from $268 million.

British Columbia posted the largest decline, the result of lower spending on commercial, institutional and industrial projects.

Most of the province’s projects were started in 2006 and early 2007 and are now almost completed, reports Statistics Canada.

British Columbia dropped to $1.34 billion in investment from $1.42 billion the quarter before. New Brunswick experienced an investment drop from $155 million to $143 million and Manitoba from $201 million to $193 million.

Atkinson says CCA tells its members that these short-term numbers do not give the entire picture and to keep in mind what numbers are actually being measured. This particular Statistics Canada report is based on a building permits survey of municipalities, which collects information on construction intentions.

Twenty-one of the 34 census metropolitan areas in the July Statistics Canada report posted quarterly declines with the biggest drop in Vancouver from $858 million to $792 million. Calgary posted the next largest decline, dropping from $1.260 billion to $1.228 billion.

The entire Ottawa- Gatineau area was next with a total decline from $376 million to $361 million.

Print | Email | Comment