Oil Price Bust - a Boon to Other Sectors

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The lower oil price will be a boon for other economic sectors, including construction, which will see stable workloads with low escalation for 2015 for most regions, according to BTY Group.

BTY 2015 Market Intelligence Report

“The manufacturing and export sectors will step up as oil steps down as the primary engine of economic growth.” Joe Rekab, Managing Partner

The lower oil price will be a boon for other economic sectors, including construction, which will see stable workloads with low escalation for 2015 for most regions, according to BTY Group’s annual Market Intelligence Report.

Intensive energy users such as manufacturing, mining, agriculture, and forestry are enjoying huge cost savings from the low price of oil as the demand for their output rises due to the strengthening U.S. economy. The lower Canadian dollar makes their exports more affordable – and Canada a more attractive place for foreign investment.

The combination of the low oil price, a lower value loonie and low interest rates will make for healthy levels of construction, accompanied by an easing of the recent high levels of demand for skilled trades, and stronger competition among contractors will help keep escalation low. Steady high immigration and foreign investment will support residential building, especially in the larger cities.

“The manufacturing and export sectors will step up as oil steps down as the primary engine of economic growth,” said Joe Rekab, Managing Partner at BTY Group. “Their strength, with renewed infrastructure spending and a resilient residential sector, bode well for stable construction workloads with low escalation for 2015.”

Ontario will thrive as manufacturing and exports benefit from low energy costs and a lower loonie. Add in spending on massive transit and bridge projects, still strong housing demand and healthy commercial construction in the GTA, and the outlook becomes very positive for its return as Canada’s growth leader.

Alberta still has a large inventory of projects that should enable it to ride out the lower oil price. This includes major ongoing oil and gas, pipeline, oilsands, and large transmission and renewable energy projects, as well as residential and commercial building in its big cities and strong horizontal and vertical infrastructure spending.

Quebec is another winner from the lower oil price and lower loonie. They will give its economy a shot in the arm as the province prepares for the next wave of massive infrastructure projects. Modest gains in housing and ongoing energy and resource projects add stability to a positive outlook.

Saskatchewan will see the downdraft from the lower oil price partially offset by renewed global demand for potash and improved agricultural output. Expect a slight dip in housing starts in 2015 to be balanced by healthy spending on both horizontal and vertical infrastructure.

Construction in BC is on the upswing with major utility projects – led by the $ 7.9 billion Site C Dam – and mining, LNG terminal, pipeline and shipbuilding projects that are expected to ramp up in 2015 and 2016. Healthy in-migration that helps to sustain residential building, and renewed infrastructure spending will see BC construction on the upswing.

BTY Group has been publishing its annual industry review of construction cost forecasts across Canada since 2003. Over the years the Market Intelligence Report has earned a reputation in the development, property and finance communities for crucial insight on factors behind the changing marketplace and reliable unit rate cost projections for the coming year.

BTY Group has been publishing its annual industry review of construction cost forecasts across Canada since 2003. Over the years the Market Intelligence Report has earned a reputation in the development, property and finance communities for crucial insight on factors behind the changing marketplace and reliable unit rate cost projections for the coming year.

A full copy of the report can be accessed on BTY Group’s website at http://www.bty.com

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Saira Muzaffar
BTY Group
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