Another housing market contraction brings down December construction investment
Investment in building construction fell in December as a combination of rising interest rates and seasonality again dragged down spending in the residential sector.
Statistics Canada reports that construction investment dropped by 1.3% for the month, reaching $20.2 billion.
The overall decline was driven by losses in the residential sector. Housing investment contracted by 2.1% for the month – to $14.6 billion.
Investment in the construction of single-family homes declined for the fifth consecutive month, shedding 0.5% to reach $7.8 billion. Alberta (-3.6%) played the largest role in the decline. Investment in multi-unit construction, meanwhile, decreased 3.9% to $6.8 billion. Ontario posted its largest decline (-8.1%) since April 2020 – the earliest days of the COVID-19 pandemic.
Investment in non-residential construction, meanwhile, rose 0.8% to $5.6 billion. Ontario (+2.7%) accounted for most of the growth, with gains in each component.
Industrial construction investment increased for the 13th consecutive month, up 2.1% to $1.1 billion. Commercial construction investment remained relatively stable for the month, up 0.1% to $3.1 billion. The growth in Ontario (+1.7%) offset declines in seven other provinces.
Institutional construction investment increased 1.5% to $1.4 billion and has remained around this value since October 2021.
Fourth quarter investment drops 1.9%
The total value of investment in building construction declined 1.9% to $61.3 billion in the fourth quarter. The residential sector was down 3.4% to $44.8 billion, while the non-residential sector advanced 2.6% to $16.5 billion.
Residential construction investment (-3.4%) had its largest decline since the third quarter of 2021. Similarly, Canada Mortgage and Housing Corporation reported a 5.0% decline in residential construction starts in the fourth quarter of 2022 compared with the previous quarter.
Investment in the construction of single-family homes fell 6.0% to $23.8 billion in the fourth quarter, while the multi-unit component decreased 0.3% to $20.9 billion.
Investment in non-residential construction increased for the seventh consecutive quarter, up 2.6% to $16.5 billion.
Gains across all non-residential components were led by the commercial sector, which increased to a new record of $9.2 billion, surpassing its previous peak from the fourth quarter of 2019. Commercial construction investment was up 13.1% compared with the fourth quarter of 2021.
Industrial construction investment rose 5.4% in the fourth quarter of 2022, posting significant gains over the previous four quarters. Ontario and Quebec saw an increase in this component for the eighth consecutive quarter.
Finally, institutional construction investment increased 1.2% after declining in the previous two quarters. Investment in the institutional component remained relatively unchanged compared with the fourth quarter of 2021.