The Daily

Monday, April 14, 2008

Investment in non-residential building construction
 
First quarter 2008

Last year's pace for investment in non-residential building construction continued into the first three months of 2008, again the result of major construction activity of office buildings underway in Alberta and Ontario.

First-quarter investment hit $10.3 billion, up 1.6% from the fourth quarter and the 20th consecutive quarterly increase.

In constant dollars, investment in non-residential building construction declined 0.3% from the fourth quarter.

Investment increased in all three components from the fourth quarter. In the commercial component, it rose 1.6% to $6.3 billion; in the industrial component, it went up 4.0% to $1.5 billion; in the institutional component, it edged up 0.2% to $2.6 billion.

Note to readers

Unless otherwise stated, this release presents seasonally adjusted data, which ease comparisons by removing the effects of seasonal variations.

Investments in non-residential building construction exclude engineering construction. This series is based on the Building Permits Survey of municipalities, which collects information on construction intentions.

Work put-in-place patterns are assigned to each type of structure (industrial, commercial and institutional). These work patterns are used to distribute the value of building permits according to project length. Work put-in-place patterns differ according to the value of the construction project; a project worth several million dollars will usually take longer to complete than will a project of a few hundred thousand dollars.

Additional data from the Capital and Repair Expenditures Surveys are used to create this investment series. Investment in non-residential building data is benchmarked to Statistics Canada's System of National Accounts of non-residential building investment series.

For the purpose of the Investment in non-residential building construction release, the census metropolitan area of Ottawa-Gatineau is divided into two areas: Ottawa-Gatineau (Que. part) and Ottawa-Gatineau (Ont. part).

Provincially, the biggest first-quarter increase (in dollars) occurred in Alberta, where investment rose 5.1% to $2.5 billion, a 19th consecutive quarterly gain. In Ontario, which was a close second, investment increased 3.1% to $3.8 billion, as a result of gains in all three components.

In contrast, British Columbia posted the biggest drop as a result of a decline in spending on construction of industrial and institutional projects. These projects were started in 2006 and early 2007 and are now almost complete.

The non-residential sector continued to be positively affected by low office vacancy rates, a vigorous retail sector and strong corporate profits.

Furthermore, investment intentions (including engineering construction), according to Statistics Canada's Survey of Private and Public Investment, are forecast to increase by 6.8% in 2008 from 2007.

Of the 34 census metropolitan areas, 15 registered quarterly growth. The strongest gain (in dollars) was in Toronto, where investment rose 4.2% to $1.9 billion. It was followed by Hamilton, where investment increased 24.5% to $166 million, the result of higher spending in all three components.
Commercial component: Robust office activity in Alberta and Ontario

Investment in commercial building construction reached a quarterly record high, thanks to the strong activity underway on office building construction sites in Alberta and Ontario.

Overall, four provinces and two territories showed increases in commercial investment in the first quarter. The largest contributions (in dollars) occurred in Alberta (+5.6% to $1.7 billion) and in Ontario (+1.9% to $2.2 billion). Both amounts are all-time highs.

After six consecutive quarterly increases, Quebec recorded the most significant decline as a result of a slowdown in investment in office buildings and shopping centres construction.

Among census metropolitan areas, 17 posted first-quarter gains. Commercial investment in Calgary and Toronto recorded the strongest gains in dollars.

In contrast, Montréal posted the largest decline, following seven consecutive quarterly increases, as several commercial projects that started in 2006 and 2007 are now almost complete.

A decline in vacancy rates in the major urban centres continued to put positive pressure on office building construction. In addition, growth in retail and wholesale trade in 2007 appears to have had a favourable impact on the construction of warehouses, which have posted eight quarterly gains in the last two years.
Industrial component: Gains in manufacturing plants and utilities buildings

Investment in industrial building construction increased for the fourth straight quarter. This was the result of strong investment gains in the construction of manufacturing plants and utilities buildings in six provinces, particularly Alberta and Ontario.

At the provincial level, the largest contribution to the quarterly increase (in dollars) occurred in Alberta. This was the result of spending on the construction of major projects for manufacturing plants and utilities buildings that began in 2007.

British Columbia posted the largest decline (in dollars), as investment in all industrial building categories fell after four consecutive quarterly gains. This decline was the result of several industrial projects, in particular warehouse and storage buildings, which started in 2006 and are now mostly complete.

Overall, 14 metropolitan areas registered quarterly growth, with the strongest gains in Edmonton and Toronto.

Calgary experienced the largest drop. This decline was the result of several industrial projects that started in 2006 and 2007, and are now mostly complete.
Institutional component: Spending remains stable

Following previous declines, spending in the institutional component saw a slight rebound of 0.2% to $2.6 billion in first quarter. A strong gain in spending on health care facilities more than offset declines in all other institutional categories.

Provincially, by far the biggest first-quarter increase (in dollars) occurred in Ontario, where investment rose 5.0% to $1.0 billion. This was due mainly to strong spending in the construction of health care facilities.

In contrast, British Columbia saw investment fall 4.5% to $372 million. The decrease was the result of institutional construction projects that started in mid-2005 and early 2006 and are now mostly complete.

Among census metropolitan areas, Hamilton led first-quarter growth, with investments rising 44.9% to $75 million. The gain was driven by substantial investments in health care and educational facilities.

For the second consecutive quarter, Calgary registered the most significant decline in dollars, in the wake of a drop in the majority of institutional construction building categories. Of the 34 census metropolitan areas, 22 posted declines.

Available on CANSIM: table 026-0016.

Definitions, data sources and methods: survey number 5014.

More detailed data on investment in non-residential building construction are also available in free tables online from the Summary tables module of our website.

For more information, or to enquire about the concepts, methods or data quality of this release, Bechir Oueriemmi (613-951-1165; bdp_information@statcan.ca), Investment and Capital Stock Division.

Investment in non-residential building construction, by census metropolitan area1
  	First quarter 2007 	Fourth quarter 2007 	First quarter 2008 	Fourth quarter 2007 to first quarter 2008
  	Seasonally adjusted
  	$ millions 	% change
St. John's 	38 	35 	35 	-2.1
Halifax 	103 	72 	71 	-2.2
Moncton 	44 	48 	46 	-4.6
Saint John 	26 	38 	32 	-17.1
Saguenay 	38 	43 	37 	-12.2
Québec 	177 	217 	241 	11.0
Sherbrooke 	43 	40 	36 	-10.1
Trois-Rivières 	41 	59 	49 	-17.5
Montréal 	793 	889 	870 	-2.1
Ottawa-Gatineau, Ontario/Quebec 	426 	393 	377 	-4.2
Ottawa-Gatineau (Que. part) 	44 	54 	54 	0.0
Ottawa-Gatineau (Ont. part) 	383 	339 	323 	-4.9
Kingston 	44 	51 	54 	5.5
Peterborough 	16 	14 	14 	6.5
Oshawa 	98 	88 	87 	-1.7
Toronto 	1,543 	1,809 	1,885 	4.2
Hamilton 	147 	133 	166 	24.5
St. Catharines-Niagara 	76 	59 	65 	9.5
Kitchener 	135 	130 	137 	5.3
Brantford 	40 	31 	22 	-31.0
Guelph 	51 	44 	45 	4.1
London 	106 	144 	146 	1.7
Windsor 	88 	76 	73 	-3.9
Barrie 	60 	64 	60 	-6.5
Greater Sudbury 	45 	69 	72 	4.3
Thunder Bay 	19 	20 	19 	-3.7
Winnipeg 	162 	135 	127 	-5.8
Regina 	62 	87 	80 	-8.0
Saskatoon 	97 	92 	111 	21.0
Calgary 	974 	1,236 	1,257 	1.7
Edmonton 	455 	450 	479 	6.3
Kelowna 	48 	70 	78 	10.2
Abbotsford 	86 	57 	53 	-7.4
Vancouver 	787 	856 	852 	-0.5
Victoria 	96 	97 	92 	-5.2
1.	Go online to view the census subdivisions that comprise the census metropolitan areas.

Investment in non-residential building construction
  	First quarter 2007 	Fourth quarter 2007 	First quarter 2008 	Fourth quarter 2007 to first quarter 2008
  	Seasonally adjusted
  	$ millions 	% change
Canada 	9,423 	10,153 	10,317 	1.6
Newfoundland and Labrador 	61 	60 	60 	-0.8
Prince Edward Island 	28 	17 	20 	17.4
Nova Scotia 	181 	155 	150 	-3.7
New Brunswick 	142 	165 	151 	-8.6
Quebec 	1,520 	1,694 	1,680 	-0.8
Ontario 	3,437 	3,708 	3,822 	3.1
Manitoba 	225 	208 	196 	-5.6
Saskatchewan 	231 	255 	258 	1.4
Alberta 	2,156 	2,409 	2,531 	5.1
British Columbia 	1,412 	1,448 	1,417 	-2.1
Yukon 	17 	15 	11 	-21.0
Northwest Territories 	8 	17 	18 	4.2
Nunavut 	5 	3 	3 	-8.5