The 2020 Mid-Year Economic Update_long

Canadian Nonresidential Construction Down 0.8% in 2Q

Total investment falls in seven provinces.

Second quarter Canadian investment in nonresidential building construction decreased 0.8 percent from the previous quarter to C$12.8 billion (US$9.8 billion), the second consecutive quarterly decline. The decrease resulted from lower spending on the construction of commercial and industrial buildings.

At the national level investment decreased in six provinces in the second quarter, with Quebec registering the largest decline, followed by Saskatchewan. In Quebec, the decrease was mostly a result of lower spending on institutional buildings, while in Saskatchewan the decline was attributable to all three components.

Ontario, British Columbia, Newfoundland and Labrador and Nova Scotia posted slight increases in the second quarter.

Metropolitan Areas

Non-residential investment rose in 19 of 34 census metropolitan areas. The largest decline occurred in Montréal, followed closely by Ottawa. In Montréal, the decrease was attributable to lower institutional construction spending, while the decline in Ottawa came from lower spending on commercial buildings.

Conversely, the largest gains occurred in Toronto, Edmonton and Vancouver. In both Toronto and Edmonton, the increases resulted mainly from higher investment in the construction of institutional structures and, to lesser extent, commercial buildings, while in Vancouver, the gain was due to higher institutional and industrial construction spending.

Industrial Component

Investment in industrial projects declined in seven provinces, decreasing 2.4 percent nationally to C$1.6 billion (US$1.2 billion) in the second quarter.

This was a second quarterly decline and was attributable to lower spending in every industrial building category.

The largest declines were in Ontario, decreasing 2 percent to C$702 million (US$538.9 million), with Alberta a close second, down 3.6 percent to C$359 million (US$275.6 million). In Ontario, the decrease was largely due to lower spending in the construction of primary industry and manufacturing facilities, while in Alberta the decline was a result of lower spending on the construction of maintenance and utilities buildings.

In the second quarter, the three provinces that registered gains were Quebec, New Brunswick and British Columbia. In Quebec, industrial construction investment was up largely from higher spending on the construction of primary industry and utilities buildings. In New Brunswick, investment increased mainly as a result of higher spending on the construction of primary industry buildings, while in British Columbia, the increase was largely from the construction of maintenance buildings.

Institutional Component

Investment in institutional construction increased 1.8 percent in the second quarter to C$3.6 billion (US$2.8 billion), the fifth consecutive quarterly increase. Growth among several categories of institutional buildings, particularly medical facilities and educational institutions, accounted for the advance in the component.

Ontario and Alberta were the major contributors to the increase in institutional building construction investment in the second quarter. In Ontario, investment advanced 6 percent to C$1.4 billion (US$1.1 billion) and came mainly from higher spending on the construction of medical facilities and nursing homes and retirement residences. In Alberta, institutional investment rose 7 percent to C$512 million (US$393 million), the fourth consecutive quarter of growth. This increase was mainly a result of higher spending on the construction of educational institutions.

In contrast, Quebec registered the largest decrease, with spending on institutional buildings declining 5.3 percent to C$892 million (US$684.7million). This was the second consecutive quarter of decline and came mostly from lower spending on the construction of health care facilities.

Commercial Component

Investment in commercial building construction declined 1.6 percent in the second quarter to C$7.6 billion (US$5.8 billion). This was the third consecutive quarterly decrease and was the result of lower spending in eight provinces across several categories of commercial buildings.

Ontario registered the largest decline in commercial building construction investment, followed by Alberta.

In Ontario, investment in commercial building construction fell 2.1 percent to C$2.8 billion (US$2.2 billion). This was the fourth consecutive quarterly decline and originated mainly from lower spending in the construction of recreational and retail and wholesale buildings.

In Alberta, commercial investment was down 1.8 percent to C$1.9 billion (US$1.5 billion), a third straight quarterly decline. This resulted mainly from lower spending in the construction of office buildings and other accommodation facilities.

In Nova Scotia, commercial investment was up 6.6 percent to C$113 million (US$86.7 billion), a third consecutive quarterly advance. The gain was largely attributable to higher spending on hotels and office building construction.

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