June 26, 2009

Federal stimulus funds may be flowing faster than people think

Early signs of recovery are on the horizon

VINCE VERSACE

staff writer

Stimulus dollars intended to drive investment activity and construction are not flowing as quickly as they should, an informal poll of industry stakeholders reveals.

Approximately 75 per cent of respondents to the poll question, “In your opinion, government infrastructure projects are coming on-stream in a: flood, rapid stream or trickle,” chose the “trickle” option during a recent Reed Construction Data webinar.

Alex Carrick, chief economist at CanaData, presented a mid-year economic update and construction outlook which included interactive components for industry stakeholders who logged into the webinar.

Carrick noted that although there is wide perception that stimulus dollars are not flowing fast enough, a majority of recent CanaData’s top ten construction projects are institutional and heavy civil works.

The recession and its impact on not just construction but also the wider economy played a major role in Carrick’s presentation. Webinar attendees expressed concern and asked Carrick about when economy recovery could be expected and what might drive it. CanaData’s chief economist expects that early signs of economic recovery starting could be evident by the end of this year or the beginning of next year.

Construction costs and prices will begin to pick up because commodity prices will be picking up within a year, said Carrick. Private-sector activity will pick up again, causing construction costs and prices to start moving again. A poll during the webinar indicated that 71 per cent of those logged in thought growth would begin again by the first quarter of 2010.

Evidence of how severe the Canadian commodity bust was after its earlier boom was best illustrated in the percentage of housing starts year-over-year, from January to May 2009 versus the same period for 2008, noted Carrick.

British Columbia experienced a 71 per cent decline in housing starts, Alberta 69 per cent, Saskatchewan 63 per cent and Manitoba 46 per cent. Though Ontario was not part of the commodity boom, its housing starts declined by 42 per cent. A majority of this could be attributed to auto sector and manufacturing declines, said Carrick.

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