OTTAWA, March 23 /CNW Telbec/ - Profits in Canada's residential construction industry will rebound this year, thanks to rising demand and prices. In contrast, non-residential construction profits are expected to decline to a six-year low in 2010, according to the Conference Board of Canada's forecasts for the residential and non-residential construction industries.
"Although the residential construction industry experienced a sharp contraction last year, its health is quickly improving. The number of housing starts has steadily improved since bottoming out last spring and prices are expected to reverse their decline," said Michael Burt, Associate Director, Industrial Economic Trends.
For the residential industry, housing starts are forecast to jump from 147,600 units in 2009 to 180,500 this year. Following a decline last year, new home prices will increase 2.4 per cent this year, and will continue to experience healthy growth between 2011 and 2014. Pre-tax profits in the residential construction industry are forecast to rebound from a four year low to reach $2.7 billion in 2010. However, it will be 2012 before profits return to their pre-recession peak.
"On the other hand, the recovery for the non-residential construction industry will be slow to materialize. Declining spending on commercial and industrial buildings is more than offsetting a rise in spending on institutional structures. Total investment in non-residential construction is expected to fall by 2.3 per cent this year," said Burt.
With non-residential construction activity and prices both expected to fall this year, industry profits will decline by 19 per cent to $918 million in 2010. Although profits will begin to recover in 2011 thanks to increases in industrial and commercial spending, they are not expected to return to their pre-recession peak through 2014.
SOURCE Conference Board of Canada
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