Non-residential investment numbers: Good news for construction sector

THINK OUTSIDE THE BOX:  Positive investment in any type of building construction is great news for the construction sector in our province, especially in a downturn.

Despite facing a moderate contraction this year, new data shows that Alberta’s construction sector should remain in good shape. According to Statistics Canada, Alberta had one of the largest advancements in investment in non-residential building construction over the third quarter of this year. Investment grew by nearly four per cent from last year to $2.77 billion.

Non-residential construction includes three types of projects: commercial (such as office towers and shopping centres), industrial (such as warehouses and manufacturing facilities) and government and institutional (such as schools and hospitals). Not surprisingly, Alberta’s biggest gains in investment over the third quarter were in the government and institutional category which grew by 50.9 per cent, year-over-year ($629.2 million). Investment in this particular category helped lift the provincial average. Industrial and commercial investment fell by 12 and four per cent respectively.

The story was much the same across Alberta’s two largest cities—investment in institutional and government were strong in both Edmonton and Calgary.

In Edmonton, commercial investment also saw positive growth over the third quarter (+10.2 per cent, year-over-year), while investment in industrial building construction pulled back by 17 per cent from last year. Overall, in Edmonton total non-residential building investment was up by 21 per cent compared to the third quarter in 2014

Calgary notched healthy investment growth in its industrial category which grew by 6.7 per cent since last year while investment in commercial investment remained virtually unchanged from the third quarter in 2014. Total non-residential building investment in Calgary is up from this time last year by 10.6 per cent.

Even though Alberta saw growth in non-residential construction investment in the third quarter, the majority of the emphasis is on the industrial and government sector. Given the slowdown, this isn’t surprising. But moving ahead, positive investment in any type of building construction is great news for the construction sector in our province, especially in a downturn.

The Owl    Nick Ford    Economist    October 15, 2015

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