market watch Spotlight: Construction
Trade Uncertainty and Commodity Pricing Temper Optimism
WITH SOLID PROVINCIAL wage growth and the possibility of lower interest rates, Canada’s economic outlook for 2020 is relatively positive, says Turner & Townsend in their 2020 Canadian Market Intelligence Report, which examines economic conditions and outlooks across the country for the construction sector. However, a negative or delayed resolution in the USA-China trade negotiations may hinder growth, given Canada’s significant exposure to international trade. “We see a number of positive signs for the Canadian economy that will help to underpin growth. There is low unemployment, inflation has remained controlled and wage growth is positive. Prices on steel and aluminum have stabilized following the conclusion of trade negotiations and the removal of tariffs,” said Gerard McCabe, Managing Director Canada for Turner & Townsend.
B.C.’s economy is expected to outperform the Canadian average with GDP growth of up to 2.5%
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April/May 2020
Non-residential construction investment is unlikely to see a marked increase over the year, but the moderate project pipeline should help some construction markets remain buoyant. The residential sector is forecast to make a modest recovery over 2020, though will be limited by household debt, which is expected to reach an all-time high. Infrastructure and transport projects will drive construction through 2020–21 while other sectors remain subdued. In British Columbia, significant investments in the energy sector and rising demand for real estate and transportation due to an increasing population continue to make the construction industry a major contributor to economic growth, and the residential sector is forecasted to have a modest recovery in 2020 driven by steady population growth and a robust job market enabling solid wage growth. Alberta will continue to be challenged by the uncertainty caused by oil production curtailments and a subdued labour market. Despite that, new projects have helped expedite recovery to consumer spending and residential construction, which was the result of the sluggish labour market and high unemployment rate. Significant transport projects include the $4-billion Green Line LRT in Calgary and various sections of the $2.6-billion Edmonton LRT. These projects are likely to create a shortage of skilled civil and engineering trades in the market. In Saskatchewan, the economy is driven by commodity output and has the most at stake amid rising trade tensions between the U.S. and China. Uncertainty surrounding commodity prices has stalled new investment. Following the completion of several major mining projects, workers have left the province to find other opportunities. Major projects in health, highways, and utilities are winding down, leaving significant spare capacity in the labour market. Saskatchewan’s housing market showed weak growth
