Commercial Investment Is Down In The Maritimes, We Must Heed The Warning
David Campbell is a Moncton-based economic development consultant and co-host of the Huddle podcast, Insights. The following piece was originally published on his blog, It’s the Economy, Stupid!, on Substack.
We have talked a lot about housing, and for good reason, but we must be able to walk and chew gum at the same time: we need to talk about private sector business investment.
One measure of investment is the value of building permits. This doesn’t take into account the machinery and equipment in the buildings but the costs associated with things like new builds and renovations are a good proxy for business investment and business confidence.
As I have discussed many times before, business investment is a bet on the future. If a company believes it can amortize the amount invested over a reasonable time horizon and make a reasonable return on that investment, it will make the capital outlay. Otherwise, it won’t.
If we go back to January of 2021, when were kind of coming out of Covid-19, to July of this year, New Brunswick ranks ninth among the 10 provinces for the value of industrial building permits issued, ninth for commercial, and seventh for institutional and governmental. Comparatively, we are only seeing half the investment as in the rest of the country in all three categories.
Before the pandemic, New Brunswick was doing better, ranking sixth among 10 provinces for industrial, seventh for commercial, and sixth for institutional and governmental building permits issued. Compared to the national level, New Brunswick was only five percent lower for industrial, 25 percent lower for commercial, and 20 percent lower for institutional and governmental.
By the way, Nova Scotia is not doing much better. It ranks eighth for industrial, eighth for commercial, and ninth for institutional and governmental on a per-capita basis since January 2021. Of course, our friends on Prince Edward Island are killing it (relatively), ranking second for industrial building permits (27 percent above Canada), third for commercial (11 percent above Canada), and only sixth for institutional and governmental (32 percent below Canada).
New Brunswick and Nova Scotia can’t take growth for granted. We must be able to deal with the consequences of growth (health care, worker shortages, long wait times for permits) and work on the underlying longer-term drivers of growth.
If we are not seeing industrial or commercial investment like building permits, that is a warning and one we need to heed.
Huddle publishes commentaries from groups and individuals on important business issues facing the Maritimes. These commentaries do not necessarily reflect the opinion of Huddle. To submit a commentary for consideration, contact editor Mark Leger: [email protected].