Canadian Nonresidential Construction Spending Up in 3Q

Source: Statistics Canada

Investment in non-residential construction reached $11 billion in current dollars in the fourth quarter of 2008, up 1.7% from the third quarter. In 2002 constant dollars, however, investment was down 1.2% from the third quarter.

The increase in current dollars was mainly the result of rises in institutional and commercial building construction. Investors spent $6.8 billion on commercial projects, up 1.5% from the third quarter, while in the institutional component, investment rose 3.7% to $2.8 billion. Spending in the industrial component declined 1% to $1.4 billion.

All provinces and two territories recorded advances in the fourth quarter. The fastest increases occurred in Ontario, Quebec, Newfoundland and Labrador and Alberta, mainly the result of higher spending on institutional and commercial buildings.

Investment rose in 27 of 34 census metropolitan areas. The largest increase occurred in Edmonton, where significant increases in the institutional and commercial components resulted in a 7.0% advance to $614 million in the fourth quarter.

After rising for seven consecutive quarters, investment in Toronto recorded a decline, the result of decreases in the commercial and industrial components.

Commercial
On a quarterly basis, investment in commercial buildings increased in the fourth quarter, mainly as a result of higher spending on the construction of office buildings in British Columbia and storage and recreational buildings in Quebec.

Overall, seven provinces and three territories recorded increases in commercial investment. The largest contributors (in dollars) were British Columbia (+2.8% to $928 million), Quebec (+2.0% to $1.1 billion), Manitoba (+16.5% to $137 million) and Newfoundland and Labrador (+54.1% to $49 million).

In contrast, Ontario, Nova Scotia and Saskatchewan recorded declines resulting from lower spending in several commercial building categories.

Institutional
Spending in the institutional component advanced for a fourth consecutive quarter, mainly as a result of higher investment in educational and health care buildings.

Fourth-quarter investment increases were shared by six provinces and two territories. Ontario recorded the largest gain in dollars, followed by Alberta, as a result of significant spending on the construction of educational and health care buildings.

In contrast, Manitoba posted the largest reduction in dollars. This was the result of the completion of institutional construction projects started at the end of 2006 and 2007.

Industrial
Investment in industrial building construction declined for the second consecutive quarter.

Increases in spending on several industrial building categories in six provinces were more than offset by declines that occurred mainly in the construction of manufacturing plants in Ontario, Alberta and British Columbia.

Even so, the $1.4 billion fourth-quarter total for industrial construction was 3.0% higher than the average quarterly level recorded in 2007. This increase was largely attributable to a rise in construction activity on utilities and primary industry buildings.