Canadian construction industry growth holding pace with inflation: FMI

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Ontario Construction News staff writer

Raleigh, NC-based FMI says Canadian construction industryโ€™s growth is keeping pace with inflation, with a three per cent increase projected for 2019.

This growth is โ€œslightly less than what we saw in 2018, which grew by four per cent, compared to (20)17,โ€ the consulting and investment banking organizationโ€™s managing director Jay Bowman says in a video posted on its website.

โ€œBut the reason why weโ€™re not seeing a more negative downturn, is really the juxtaposition if you will of different economic influences on the national economy,โ€ Bowman said.

โ€œOn the positive side we continue to see household spending at high levels (as) job growth continues. Thereโ€™s more investment from a business perspective (with) equipment and machinery, and the US has removed the tariffs on aluminum and steel.โ€

However, Bowman said some factors are limiting growth. โ€œMost of those revolve around exports decreasing, the lower price of oil and continued uncertainty around trade,โ€ he said.

Overall, he said FMI sees growth continuing at roughly 2 to 2.5 per cent over the next five years. โ€œThere are some questions around the residential sideโ€ in the near term with a decline in starts expected over the next 12 months, he said.

โ€œSimilarly, on the commercial side and in non-residential building construction, weโ€™ve seen some of the major projects come to an end. But on the non-building side, (growth) this year should actually be fairly large because of the number of mega projects that are being brought to the market in both the power and water and wastewater markets.โ€

Bowman noted that contractors and owners should baying attention to the change in spending composition.

โ€œI typically look at that in (in terms of) replacement and displacement,โ€ he said. โ€œYou can think of replacement as the change in construction. For example, take data centres. What weโ€™re seeing in the replacement change is that thereโ€™s more of the hyper-scale, the million square foot-plus data centres compared to the co-location or smaller enterprises.โ€

โ€œFrom the displacement perspective, we see this primarily in the retail sector where the rise of e-commerce has led to more investment in distribution centres and less in the traditional brick and mortar retail,โ€ he said.

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