The 2020 Mid-Year Economic Update_long

Canadian Nonresidential Construction Down 1.2% in 1Q

Total investment decreases in eight provinces.

First quarter Canadian investment in nonresidential building construction decreased 1.2 percent from the previous quarter to C$12.9 billion (US$10.6 billion), following three consecutive quarters of growth. This decline was largely the result of lower spending on the construction of commercial buildings.

At the national level investment decreased in eight provinces in the first quarter, with the largest decline in Ontario, where investment fell 2 percent to $4.9 billion (US$4 billion) as a result of lower spending on commercial buildings.

Alberta and British Columbia were the only provinces to register gains. In Alberta, the gain was due to increases in the institutional and industrial components, while in British Columbia, it resulted from higher spending on institutional buildings.

Metropolitan Areas

Nonresidential investment was down in 20 of 34 census metropolitan areas. The largest decline occurred in Ottawa, followed by Saskatoon.

In Ottawa, the decrease was attributable to commercial spending, while the decline in Saskatoon came largely from lower spending in commercial and institutional buildings.

Conversely, the largest advances were reported in Edmonton and Vancouver. In Edmonton, the increase resulted from higher investment in the construction of institutional and commercial buildings, while in Vancouver investment advanced in all three components, mainly institutional buildings.

Industrial Component

Investment in industrial projects increased in six provinces in the first quarter, down 0.7 percent to C$1.6 billion (US$1.3 billion), following two consecutive quarters of growth. The decrease was mainly attributable to lower spending on the construction of primary industry buildings and, to a lesser extent, utilities buildings.

The largest contributor to the decline was Quebec, where investment fell 5.4 percent to $263 million (US$215.2 million), marking the sixth consecutive quarter of decline. The decrease resulted from lower spending in the construction of manufacturing plants, maintenance buildings and primary industry facilities.

The largest increase occurred in Alberta, where industrial building construction spending rose 4 percent to $374 million (US$306 million), mostly as a result of higher investment for maintenance buildings and, to a certain degree, manufacturing plants as well as utilities buildings.

Institutional Component

Investment in institutional construction edged up 0.1 percent to $3.5 billion (US$2.9 billion), a fourth consecutive quarterly increase. The growth observed among several categories of institutional buildings, including medical facilities, nursing homes and retirement residences, more than offset the decline at educational institutions.

Alberta and British Columbia were the major contributors to the increase. The advance in Alberta resulted mainly from higher spending on the construction of educational institutions and cultural centers, while the increase in British Columbia was led by higher spending for health care facilities.

In contrast, Quebec registered the largest decrease, where spending on institutional buildings declined 2 percent to $941 million (US$769.8 million), following six consecutive quarters of growth, due to lower spending on the construction of educational buildings.

Commercial Component

Investment in commercial building construction decreased 1.9 percent to C$7.7 billion (US$6.3 billion) in the first quarter. This was the second consecutive quarterly decrease in the component and was mainly the result of lower spending on the construction of retail and wholesale outlets and recreational buildings.

Ontario posted the largest decrease, as investment fell 4 percent to $2.9 billion (US$2.4 billion), the third consecutive quarterly decline. The decrease was mainly attributable to lower spending on the construction of retail and wholesale outlets, recreational buildings and warehouses.

Quebec and Newfoundland and Labrador posted increases, as a result of higher spending spread among several commercial building categories.

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