Mann at Work
Reed Construction Data editor Denise Mann gathers North American construction-related economic announcements from around the Web and summarizes them just for BuildingTeam Forecast readers. Your feedback and suggestions for future topics to be covered are always welcome.
Monday, September 24, 2007
Canada Will Weather the U.S. Economic Storm
I attended the CanaData Construction Industry Forecasts Conference on September 20, and I have to say the mood among the economists and delegates was definitely upbeat and positive.
Here’s a summary of some of the highlights of the conference.
Canadian-United States Dollar Parity
The Canadian Economy Takes a Different Path
Speaking to Canada’s construction industry leaders, Dr. Warren Jestin, Senior Vice-President and Chief Economist, Scotiabank, led off the morning sessions by stating that the “main street impact of the sub-prime crisis has a very long tail, and you’ll be hearing about it for a while.”
In light of the turbulence and threat of recession in the U.S., Jestin predicted two more quarter-point decreases in the Federal Funds Rate in the coming months, hard on the heels of the September 18th half-point reduction. However, Jestin said that he doesn’t see the Bank of Canada following the Fed’s lead.
In fact, Jestin predicted that Canada is headed on a very different path from the U.S. He credits three factors for this: the country’s resource-rich economy, hefty government surpluses and large numbers of householders in good financial shape.
All of these factors make Canada attractive to global investors, and greater investment means more construction opportunities.
But economists and experts at the CanaData conference were optimistic that Canadian residential construction will remain above 200,000 units for at least the next three years. In fact, economist Will Dunning, of Will Dunning Inc., said that the amount of recent Canadian employment growth alone makes him “confident” about the residential housing market.
In his article entitled Near Record High Non-Residential Construction Starts in July, Haughey forecasts that starts will stay high but are unlikely to rise much above the current level.
Although the Canadian non-residential sector hasn’t seen the gains posted in the U.S., CanaData chief economist Alex Carrick said that total non-residential starts have had a “very strong year” and will begin to pick up even more momentum in 2008.
Carrick explained that the coffers of the federal government — and most provincial governments, too — are full. “Governments have a lot of money right now,” said Carrick, “so expect to see more institutional and heavy engineering projects announced, with starts in 2008 and 2009.”
As for commercial construction, Carrick pointed out that there are three markets in Canada that are particularly positive for new commercial construction: the Greater Toronto Area, Vancouver and Calgary.
In the office-building sector, Paul Morse, Sr. Vice-President, General Manager and National Practice Director for Cushman & Wakefield Lepage, had good news for conference delegates. “We’re in the early stages of an office development boom,” said Morse, “and vacancy rates are as low as they’ve been in 22 years.” In fact, said Morse, the sub-prime crisis, credit crunch and the subsequent rate cut have made the environment better for real estate investment trusts (REITs) and other large borrowers.
Next Year’s Conference
Post a comment