Manitoba Construction Activity

Counting on mega projects in five sub-categories of construction

June 27, 2011

Counting on mega projects in five sub-categories of construction

Alex Carrick

Chief Economist, CanaData

According to CanaData’s starts statistics, private sector money has been tardy in returning to the marketplace so far this year. Through May 2011, commercial construction starts are down 35% in square footage versus the first five months of last year and industrial starts are -24%.

Large drops have also occurred in the two categories that received a boost in 2010 from government stimulus spending – institutional (-55% in square footage year to date) and engineering (-50% in dollar volume) – but this was expected.

Investment in construction by private sector firms is a lagging indicator. The economy has to exhibit a record of improvement over a prolonged period of time for owners to spend money adding office space or expanding production capacity. Well into the recovery, firms’ decision makers get by on what they already have in place.

There are some exceptions to these rules.

When asked where I think the action will be in construction, I almost always point to the engineering category. While the public sector may be stepping back from initiating some kinds of work, the importance of commodities and raw materials to Canada ensures that a number of major projects will be going ahead regardless.

Emerging market demand will be the catalyst and giant international corporations, most often based in other countries, will be the facilitators.

Furthermore, while some infrastructure money may be about to dry up, that doesn’t seem to be the case in all areas of civil work. In particular, there are a great number of transit projects that are still in the proposal stage, made more urgent by recent civic elections, special events (Pan-Am Games in Toronto) or simply a backlog of need.

Assuring supplies of electricity will also take precedence over government desires to cut back on spending and balance their budgets. The industrial base of a province depends on reliable access to relatively cheap power. There is also the matter of what happens to the mood of voters when they see their hydro rates move into the ionosphere.

Canada's underground economy worth about $36B - Morden Times ...

QMI AGENCY

FIRST POSTED: TUESDAY, JUNE 28, 2011 8:15:19 CDT AM

Canada's underground economy was worth as much as $36 billion in 2008, with key areas of undeclared activity in the construction, retail, restaurant and hotel sectors, according to a new study from Statistics Canada.

The level of undeclared or under-reported activity was up 90% from 1992, Stats Can said. That pace of growth is slower than that of the overall economy, which expanded by 128% during the period.

The main reason the underground economy slowed was that the sectors responsible for underground activity make up a declining portion of the economy overall.

In 2008, the three most significant sectors in terms of underground activity were construction (30%), retail trade (16%) and accommodation and food services (12%). Combined, they accounted for nearly 60% of the total value added of underground activities.

StatsCan defined the underground economy as economic activities that have escaped measurement because they are "hidden, illegal or informal." Some illegal activities were left out of the report, it said, without giving details.

However, the agency also warned that the data may not be as reliable as other economic statistics as there is no concrete data available.

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