Oil price slump expected to drag construction down
Construction activity in Canada is predicted to drop 2% this year as a result of the decline in oil prices. The finding is from a survey by RICS, the Royal Institution of Chartered Surveyors, and is based on the “sentiments” of construction professionals.
RICS reports that the downturn is being felt most strongly so far in the oil, gas and energy sector, with 68% of respondents reporting that the price decline has been responsible for projects being ancelled. Nearly 90% believe that workloads will be further reduced over the coming year.
The report quoted Marlon Bray, a director at Altus Group: “Alberta is bearing the largest brunt of the downturn with reduced expenditures and a likely decline in tender price expectations.”
The bright spot is seen as Ontario: “While construction output is predicted to be lower across Canada,” says Bray, “Ontario remains in an optimistic position with continuing investment in the residential, commercial and infrastructure sectors.”
The RICS report, issued May 13, also quotes an Alberta government official: “Any activities connected to the oil sands are taking a real hit. There’s a lot of news regarding larger oil companies, including multinationals like Total, that previously expressed interest in investing in oil sands but are now putting projects on hold, and this is showing across Alberta. There are still a fair amount of commercial and residential projects in progress but the industrial sector is definitely taking a hit,” the official continued. “And government infrastructure projects are still proceeding, but cautiously.”
Respondents blamed financial pressures and competition from rivals as critical factors limiting growth. Nearly 60% of respondents cite both as concerns. For the longer-term outlook, respondents expect both workloads and the job outlook to improve over the next 12 months, though with less confidence than in the previous quarter.
RICS accredits 118,000 professionals around the world.