New Construction research report from Business Monitor International is now available from Fast Market Research

Boston, MA -- (SBWire) -- 08/26/2013 --We have marginally downgraded our near term outlook for Canada's construction industry, with 3.9% real growth now expected in 2013 (versus 4.1% last quarter) as a result of below trend Q1 2013 data. However, we are maintaining a relatively high rate of growth, as we believe the slowdown in the real estate market will be gradual and uneven, and that there are a substantial number of high-value infrastructure projects which should support the overall sector. Our biggest risk comes from threats to natural resource-related infrastructure, both regulatory and demand risk in oil and gas and mining. Below trend construction industry data has prompted us to downgrade our 2013 forecast for industry growth, however, we are maintaining our view that Canada will be one of the best performing developed markets over the near term. Growth will be supported by high-value infrastructure projects across the transport and energy sectors, as well as social infrastructure, industrial projects, and a housing market that seems to be defying measures put in place to bring about a slowdown.

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The greatest risks to our outlook come from a sharper-than-expected decline in the housing sector, as well as slowing demand and falling prices in the commodity sector, which are forcing developers to stall new capital investment, thereby impacting supporting infrastructure and industrial projects. We also note the growing detrimental impact of the regulatory environment on natural resource-related infrastructure. The rejection of the CAD5.5bn Northern Gateway pipeline sets a poor precedent for other similar projects; whilst the objections to plans to expand coal export capacity is a concern for investment taking place into expanding coal production.

Infrastructure Foundation For Growth

Infrastructure remains a fundamental element of Canada's construction industry growth, with a project pipeline in excess of US$120bn. Whilst we envisage below-trend growth in 2013 and 2014, there is significant upside to our view if projects are able to bypass regulatory red tape quickly.

One of the strongest sub-sectors over our 10-year forecast period to 2022 will be railways, where a project pipeline worth US$36bn will drive annual average industry value real growth of 4.5% between 2013 and 2022. This growth will be driven primarily by urban rail projects, including the CAD8.2bn Eglinton Crosstown Light Rail Transit project, the US$2.6bn Toronto Subway Spadina line expansion, the US$2.1bn Ottawa Light Rail project and the US$1.8bn Edmonton Light Rail project.

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