BC non-residential construction dropped 3/4 compared to 2/4

The most recent figures on investment in non-residential construction for the third-quarter of 2009 cloud the picture of recovery in British Columbia’s construction sector, showing a sharp decline from both the previous quarter and from a year ago.

That non-residential investment report from Statistics Canada follows from the more hopeful figures in the latest labour force survey, which recorded a slight increase in hiring after construction job losses in the tensof-thousands, and Canada Mortgage and Housing Corp.’ s latest report, which showed a modest increase in single-family housing construction.

However, the non-residential construction report was one indicator cited by Central 1 Credit Union economist David Hobden in his characterization of B.C. as “an economy largely moving sideways as it struggles to emerge from the latest recession.”

Statistics Canada, on Friday, reported that spending in B.C. on things like office buildings, shopping centres, schools and factories dropped 6.3 per cent to $1.22 billion in the third quarter, compared to the second quarter.

In dollar terms, that was the third steepest drop in spending on non-residential investment across the country, behind Alberta and Ontario.

Hobden, in Central 1’s weekly briefing released Friday, said the third quarter of 2009 was the third straight quarterly decline in B.C., and he expects spending on non-residential buildings to tumble 20 per cent this year.

Part of the decline will be due to less construction, but falling construction costs will also contribute to the drop.

Hobden said commercial vacancy rates are rising, with the result commercial rents are generally declining.

Manley McLachlan, president of the B.C. Construction Association, said the third-quarter drop in non-residential spending was no surprise and reflects the “ongoing impact of the issues we’ve been dealing with for the past year.”
“I guess it’s always the comparative,” McLachlan said. “B.C. enjoyed six years or more of tremendous ramp-up of [construction] investments, so declines, as they occur, come across as fairly dramatic.”

Commercial construction — office buildings and shopping centres — showed the biggest decline in B.C., falling to $785 million in the third quarter, which is 11 per cent off from the second quarter and 13 per cent from the same quarter a year ago.

McLachlan said he expects commercial construction will not recover until residential construction levels increase, which would in turn spark demand for new retail and commercial services.

He holds out more hope for institutional construction, which, in the third quarter, showed a 3.3-per-cent increase to $350 million compared with the previous quarter.

However, McLachlan noted that the construction sector is still waiting for more of an impact from promised government infrastructure spending, which hasn’t rolled out as quickly as people expected.

Keith Sashaw, president of the Vancouver Regional Construction Association, said institutional and government spending is expected to be the main source of growth in the sector for the coming months. He also took hope from higher levels of industrial construction for two consecutive quarters and rising building-permit applications in recent months.

“While there may be some continued volatility ahead, there are signs the worst of the recession for the construction industry may be behind us,” Sashaw said.

Nationally, Statistics Canada said investment in non-residential construction declined four per cent in the third quarter to $10.4 billion compared with the second quarter, the third consecutive quarterly decline.
Printed and distributed by NewpaperDirect | www.newspaperdirect.com, US/Can: 1.877.980.4040, Intern: 800.6364.6364 | Copyright and protected by applicable law.

"Province hit by sharp drop in non-residential construction" prepared by Derrick Penner/Vancouver Sun)