The winding down of activity at the Hibernia site in Bull Arm exerted a drag on the provincial construction industry this year. Average construction employment on Hibernia fell to about 700 in the first ten months of this year from 4,760 during the same period last year. Total industry employment did not fall as much, reflecting gains in capital investment from other construction projects.
The latest survey of investment intentions conducted in the Province during the spring indicates that investment is expected to be higher this year than in 1996. Increased government spending on major health care facilities and the Trans Labrador Highway, together with further spending in the oil and gas sector has played a significant role in the positive outlook.
Joint funding from both the Province and the federal government has facilitated public spending in 1997. The Canada-Newfoundland Infrastructure Works Agreement was topped-up by $31 million for 1997/98, representing additional capital investment and employment. As well, the Highway Construction Program was allocated $97 million, representing an increase of $32 million from last year. Of this, $20 million was targeted towards construction of the Trans Labrador Highway. Also, the provincially funded Municipal Capital Works program was allocated $25 million this year to help municipalities upgrade local infrastructure. In the private sector, construction of the $200 million oil transshipment facility at Whiffen Head, the largest project next to Hibernia, is ongoing. Project employment peaked at between 475 and 480 in October of this year.
New home construction in the Province is lagging behind last year’s pace, partly due to high levels of out-migration in rural areas of the Province. Home building in rural Newfoundland for the first nine months totalled 376 starts; down 33 percent from 561 starts a year ago. Residential construction has been more positive in urban centers, where housing starts during the same period totalled 791, essentially unchanged from last year. Nevertheless, total housing starts across the Province declined over 13 percent to 1,167 compared with 1,351 starts last year.
Residential construction in the St. John’s metro area has been the one exception to the slowdown in housing starts, posting a modest 1.5 percent gain for the first ten months. Factors such as employment gains in the metro area and low mortgage rates are largely responsible for this increase in home building. Resale demand, which typically indicates potential market strength for homebuilders in subsequent months, has shown signs of improvement this year. Sales of existing homes in the St. John’s metro area were up 14 percent for the first ten months.
1. Construction on the Trans Labrador Highway. Photo courtesy of Department of Works, Services, and Transportation.