Canada and U.S. Hope for Private Sector Spending in 2011
For Canada, it seems that as the year winds down, so does government spending. The cutoff date for the federal government’s one-third spending commitment to specially-approved projects expires on March 31, 2011. That may lead to more private sector spending.
Alex Carrick, Reed Construction Data’s Chief Economist, says, “commercial starts in 2010 will approach 30.0 million square feet, after recording a level of only 25.2 million in 2009. An improvement in the private sector/developer spending cycle will move them up to 35.0 million in 2011.”
While plants are not being built very often, profits being realized by corporations are going into machinery and equipment rather than new plants. Carrick goes on to say, “In a positive development, however, capacity utilization rates are climbing again in many key industries, auguring well for a return of stronger facilities investment beginning in 2011 and picking up steam in 2012.
The switchover from public sector financing of projects to private sector backing will be very important if engineering construction is to maintain its momentum. It will also likely mean a shift away from transit-oriented projects to more initiatives grounded in the resource sector.”
While in the U.S., McGraw-Hill expects the U.S. economy will grow 2.5% in 2011. McGraw-Hill believes there will be a slight 1% decline in public-works construction because just like Canada, lack of federal funds combined with state and local government budget cuts.
On the upside, commercial buildings are set to increase 16%, after hitting a 50-year low this year. So, private spending may be the main driver of the uplifting economy rather than public funds for both the U.S. and its northern neighbor.
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