Construction activity slowed last year despite record-level spending on the Hibernia project. Reduced spending in non-Hibernia construction together with less residential investment offset the positive impacts of the massive oil development project. Only a slight decline was recorded in employment, however, as Hibernia picked up most of the slack.

Non-Residential

Hibernia has dominated the non-residential construction sector since it began in 1990. Last year, total spending on the project reached $1.4 billion and employment at Bull Arm, the project's main construction site, swelled to over 4,800. Just as Hibernia made an important contribution, lower investment by government service industries and, to a lesser extent, wholesale and retail trade led to a marginal decline in non-residential construction spending.

High paying jobs associated with the Hibernia project have boosted the average income of construction workers. Between 1991 and 1995, average weekly earnings in the construction industry increased by almost 60 percent compared to an average increase of eight percent across all industries.

Public Infrastructure

The Canada/Newfoundland Infrastructure Works Agreement, designed to boost employment, played an important role in non-residential construction last year. Considerable funds have been spent on a variety of construction projects ranging from water and sewer installation to ice arenas. With over $55 million yet to be spent, the agreement will continue to make a significant contribution to non-residential construction in 1996.

Residential

Newfoundland and Labrador, like the Country in general, experienced a decline in new home construction last year. Housing starts fell by 23.7 percent to 1,712 units. Cautious consumer behavior, outmigration, and competition from more affordably priced existing homes dampened activity. Ironically, the downturn comes at a time when residential mortgage rates have also been declining. With the exception of a short-term hike in rates during the Quebec referendum, five year mortgage rates declined steadily in 1995 averaging just over nine percent for the year.

Employment

Total employment for 1995 averaged 10,700, down 3.6 percent from last year and slightly below the industry's 10 year average. This performance is attributed to losses in the labour intensive residential sector which more than offset gains on the Hibernia project.

Outlook

The construction industry will face another challenging year in 1996. Work on the Hibernia project, the backbone of the non-residential sector in recent years, will slow as the construction phase of the project nears completion. With Hibernia activity falling, work related to the Canada-Newfoundland Infrastructure Works Agreement will make an increasingly important contribution to non-residential activity. Despite lower interest rates, residential construction activity is expected to remain at low levels in 1996. Cautious consumer behavior combined with the persistence of a buyer's market for resale homes will result in a slight decline in housing starts again this year.

Comparing national rates of home ownership to provincial rates reveals that people in the Province are much more likely to own a home than elsewhere in Canada. Moreover, owning a home in the Province appears to be less demanding, financially speaking. Of those who own their own home (in Newfoundland and Labrador), more than half (52.1 percent) own it outright (without a mortgage) compared to only 30,8 percent nationally,