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The non-residential construction sector has been buoyed by government spending for various infrastructure projects.

Despite the recession, a new report suggests Canada's non-residential construction industry is still healthy—thanks to government spending on infrastructure.

According to the Conference Board's Canadian Industrial Outlook–Canada's Non-residential Construction Industry: Summer 2009, the industrial/commercial/institutional sector has fared far better than its homebuilding counterpart.

"Although profits are expected to decline by 33 per cent from last year's highs, the industry is performing surprisingly well," said Michael Burt, an associate director for the non-profit applied research group. "Strong spending on institutional buildings—notably social housing, schools, and hospitals—is supporting the industry's outlook this year."

The industry posted record profits of $1.9 billion last year, but this is expected to drop to $1.3 billion for 2009. (The Conference Board forecasts this number to remain largely stable through 2013.) While the recession has lowered demand for office and industrial space, construction had already started to cool a year beforehand—this softened the blow, so to speak.

The report also notes prices are likely to decline this year after three years of growth. Adding to this problem, building material costs have not significantly fallen, and a skilled labour shortage remains for specific trades. While building permits are on the rise for government buildings and schools, there has been a drop in both new offices and industrial projects, along with hotels.