Boston, MA -- (ReleaseWire) -- 05/29/2014 -- BMI View: We highlight further downside risk to the Canadian construction sector in the near term, and thus place risks to the downside to our view for 2% real growth in 2014. Whilst weakness in the residential sector has been priced in, we could see scope for a more abrupt slowdown in infrastructure industry value growth as we reach the latter end of the cycle for major projects, and do not expect the positive impact of the CAD53bn New Building Canada Plan until 2015 at the earliest.
2013 construction industry value growth came in largely in line with expectations (1.4% versus BMI estimate of 1.6%), and we are currently maintaining our expectation for 2% real growth in 2014, although we highlight risks are to the downside. We do not see any reversal in the weakness reported in the residential and non-residential building segment, although we do see scope for a temporary pick-up in housing at the start of 2014, based on a pick-up in residential building permits in Q413. However, we believe the increased cost of capital and the continued deceleration in growth in the industry overall, will mean a revival in growth rates to previous highs are not likely for the segment.
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Infrastructure is expected to remain the strongest force behind growth, with a large number of projects under construction. However, a number of these are in the final stages, raising some concerns over the sustainability of the project backlog and therefore posing the biggest downside risk to our overall construction sector outlook. Indeed, sector growth slowed abruptly in Q4 2013 and continues to show weakness in early 2014. The New Building Canada Plan does present substantial upside to this slowing growth trend over the medium term for the sub-sector, as well as continued demand for new infrastructure from the natural resource segment. Unlocking this potential through improved regulations, timely distribution of funding and well-planned projects will be key to factoring growth potential...
The Canada Infrastructure Report features Business Monitor International (BMI)'s market assessment and forecasts covering public procurement and spending on all major infrastructure and construction projects, including transportation and logistics by land, sea and air; power plants and utilities, and commercial construction and property development. The report analyses the impact of regulatory changes and the macroeconomic outlook and features competitive intelligence on contractors and suppliers.
BMI's Canada Infrastructure Report provides industry professionals and strategists, sector analysts, investors, trade associations and regulatory bodies with independent forecasts and competitive intelligence on the Canadian infrastructure and construction industry.
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