The recession caused the industry to suffer, but government funding sustained growth.
New York, NY (PRWEB) June 08, 2014
The Municipal Building Construction industry includes a wide range of noncommercial markets, including healthcare, education, religious buildings and government offices. Direct government funding accounts for almost all education and public building construction, while the private sector funds most healthcare construction. “Because the industry heavily relies on government investment, the industry's performance during the past five years has been tied to the stimulus plan passed in response to the recession in 2009,” according to IBISWorld Industry Analyst Jeremy Edwards. Subsequently, the slowdown in public expenditure as the stimulus tapered off and the prioritization of balancing the federal budget by 2015 has also affected industry performance. During the past five years, industry revenue is expected to increase an annualized 4.1% to $18.2 billion. Revenue contracted in 2011 and 2012; however, continued slow economic growth created the need for government spending, and growing corporate profit precipitated new private investment. The healthcare market surged thanks to new private investment, particularly as more projects were undertaken as public-private partnerships. Consequently, industry revenue is projected to increase 6.3% in 2014.
While the private sector stumbled briefly in 2009, the federal government's stimulus package created a boom in publicly funded construction, largely in the education market. “These contracts included both new building construction, to the benefit of larger general contractors, and smaller-scale renovation and repair projects, which helped buoy smaller firms as well,” says Edwards. Additionally, the influx of funding kept the pool of contracts from shrinking and allowed operators to avoid intense price-based competition.
Over the next five years, the value of government expenditure and investment is expected to grow slowly. The federal government is projected to focus on balancing the budget, but stronger private growth and a growing number of public-private partnerships will boost revenue. Additionally, provincial governments, such as those of Alberta and British Colombia, are expected to invest in new municipal buildings as the regions experience strong growth. The industry's largest market, the healthcare sector, is also forecast to exhibit strong growth over the next five years.
For more information, visit IBISWorld’s Municipal Building Construction in Canada industry report page.
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IBISWorld industry Report Key Topics
This industry constructs municipal and institutional buildings in the private and public sectors, including government buildings, churches, prisons, schools and healthcare facilities. Operators are usually general contractors and perform new work, additions, alterations and repairs, though they may also serve as construction managers.
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