Six Month Astonishing Outlook on Canada’s Construction Industry

Some say Canada's construction industry will rebound over the next few months, but others are a little more guarded in their predictions.

  1. The market dipped in 2020 – no surprise, due to COVID-19 restrictions – and at least one report expects the industry to begin rebounding to pre-2020 construction activity levels if the vaccine rollout goes as planned.
  2. Others expect uncertainty to linger this year. Nobody in the trades knows precisely what the industry will look like in the coming months, though Canada's activity levels have been good. But plans for buildings where people will congregate are up in the air. Some investors will keep moving on such projects, while others will shelve them.
  3. Cities have financial challenges in areas where infrastructure would typically be critical to the industry. While horizontal and civil construction keeps moving, those sectors do not include all trades and contractors. And project timing remains an issue due to the unknown with COVID-19 and whether there will be additional slow-downs.
  4. Construction starts should rebound from $60 billion to $80 billion in the coming months, with a positive outlook for multifamily residential, engineer and roadwork, and industrial. Renewables and infrastructure will be top performers with the help of government stimulus and some massive projects on the books in British Columbia, Ontario, and Quebec. That should counter declines in commercial and leisure construction.

Canada's Construction Industry Plan & Cost

Top view of group of engineering team is meeting, planning construction work,looking paper plans at construction site,overhead view canada's construction industry

The Canadian government's Growth Plan has committed $10 billion for broadband, agricultural irrigation, renewable energy, and electric vehicle charging stations. There is hope government will also invest in more traditional construction including roads, bridges, and ports to assist in promoting commerce.

As for residential, it got a big boost in the spring due to the pent-up demand caused by the lockdown, but with a drop in immigration and foreign direct investment, that spike may not be sustainable.

  1. Immigration dropped by 200,000 people in 2020 to 141,000, but the federal government has set new targets of more than 400,000 individuals for 2021 and 2022 to keep the real estate bubble from bursting. Housing starts are expected to be 211,000-213,000 this year, compared to predictions for 172,000-213,000 in 2020.
  2. Construction costs could escalate 3-5% in Quebec, British Columbia, and Ontario, with Alberta and Manitoba seeing only a 1-3% increase and Saskatchewan and Atlantic Canada experiencing a 0-2% increase.
  3. A low-interest rate, low inflation rate, the recession, and more competitive bidding are keeping construction costs from escalating further. However, there are pressures on costs due to higher lumber prices, the continued shortage of skilled tradespeople, fewer foreign suppliers, and the cost of COVID-19 protection measures.

The recovery will likely be slow, and if significant changes in consumer behavior continue, demand for office and retail will continue to decline. Brick and mortar retail will likely continue to decline as more people have shifted to online purchasing.

Hold on for a bumpy year because there will undoubtedly be ups and downs for the construction industry depending on the sector in which you work.

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Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.

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