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  • Construction investment expected to increase significantly.
  • Widespread gains anticipated led by growth in resource sectors and strong fundamentals (low interest rates, low inflation, increasing employment and incomes).
  • Major infrastructure projects continue (roads, hospitals, schools, civic and university centres).

Boosted by Major Projects

Construction

Overview

The level of construction activity picked up significantly during 1998 following a period of retrenchment that succeeded completion of the Hibernia project's construction phase. The solid performance in 1998 is attributable to an array of projects in a variety of industries. Continued development of the oil industry, particularly the Terra Nova project and the transshipment facility at Whiffen Head, energized the industry last year and is expected to be a driving force again this year. Public sector road and building construction were also a major stimulus for the industry. As was the case nationally, strength in retail sales and competition among retailers spurred commercial construction and renovation. Construction employment began the year on an upward note and gained momentum, with annual average employment increasing 17.6% over 1997.

Residential Investment

Residential activity, a major contributor to the construction industry, was the target of increased investment again in 1998. Rising investment amid declining housing starts is consistent with a trend that has seen the emphasis in housing investment shift from new construction to renovation expenditures. Growth in the renovation component reflects the recent popularity of converting existing buildings into condominiums as well as improvement and repair of existing homes. Over the past 10 years renovation activities have increased as a share of total investment from 59% to 74%. A similar shift in the composition of housing investment has also been evident at the national level. In 1999, both new construction and renovations are forecast to rise, leading total housing investment to increase by 3.4%. An increase of 2.3% is forecast for housing starts in 1999.

Activity this Year

This year, the Province's construction industry is poised to receive a major boost from developments relating to the offshore oil and gas sector. Construction investment in the mining and oil industries is expected to rise substantially, accounting for the bulk of total construction investment gains. Most of the pre-production work on the Terra Nova project is set to take place in 1999. This is expected to trigger 1,300 jobs at the peak of development phase activity. Fabrication of topsides modules and a flare stack for the project's Floating Production Storage and Offloading (FPSO) vessel at the Bull Arm site could account for as many as 700 of these jobs. The recent announcement of a $65 million expansion for the transshipment facility at Whiffen Head will also create significant employment and provide an additional stimulus for the construction industry in 1999. For details of capital investment in the oil and other industries, readers are referred to a complete listing of major capital projects included at the back of this report.

 

Canadian construction methods show up in Japan. Atlantic Canada Builders Inc., a construction partnership comprised of local companies, has successfully penetrated the Japanese market. With other contracts pending, efforts are now turning to markets in Europe.

 


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