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Construction spending continues to cool

Construction spending continues to cool

Posted on: 7/19/2018 | Author: ATB Financial's Economics + Research Team

​​Construction activity was falling faster in Alberta than all the other provinces in the second quarter of the year. New data on non-residential construction investment shows Alberta spent $2.36 billion on commercial, industrial and institutional construction projects from April to the end of June, reflecting a nearly $64 million drop from the first quarter. The figure is adjusted for seasonality and is calculated in current dollars.

The economic boom that the province experienced between 2010 and 2014, and the subsequent recession from 2015 through 2016, caused a surplus of downtown office space that has since put downward pressure on the construction of office towers, shopping malls, factories, and business parks. Specifically, the drop in the second quarter of this year was due to lower spending on theatre and performing art centres and recreational buildings (-$21.5 million), shopping centres (-$12.4 million) and passenger terminals (-$12.4 million).

Institutional and governmental construction spending also suffered from April to June thanks to lower spending on schools (-$57.6 million) and nursing homes (-$15.9 million).

Edmonton reported the biggest drop in spending among Alberta's main cities. Spending was down for both commercial (-$24.3 million) and institutional (-$16.0 million) building construction.

With a surplus of office real estate in Alberta’s cities and a general economic recovery taking place, construction on non-residential projects will look and feel much slower.

Investment in non-residential construction, graph

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