Canada's non-residential construction sector is expected to take a big hit this year, as the massive decline in oil prices weighs on investment in the oil patch. Indeed, engineering construction - which accounts for over 70% of total non-residential construction - will contract significantly in 2015, before recording a modest increase next year. - says TD Economics
The weakness in oil-related investment will conceal some pockets of solid growth. In particular, spending in the industrial and institutional building sectors are poised to outperform over the next two years, providing some offset to the declines in engineering construction. Commercial building, however, has likely peaked and is expected to be flat to down over the forecast horizon.
Given the energy-related weakness, oil-rich provinces are expected to bear the brunt of the decline in non-residential construction. Meanwhile, Ontario and Quebec will benefit from an uptick in economic activity in the U.S., while large-scale projects in Manitoba and Nova Scotia will put these provinces at the top of the leaderboard for non-residential construction growth in 2015-16.
