Ontario Construction News staff writer
In a new forecast, global construction consultant Linesight notes “encouraging growth” as Canada’s Real GDP exceeded expectations in Q1 2023.
The Canadian Country Commodity Report highlights a decline in the residential sector that contributed to a slowdown in the construction industry, and predicts the industrial sector is poised for growth because of the Canadian government’s investments in EVs, green hydrogen, metals and materials processing as growth drivers in the energy and high-tech industrial sectors that will foster growth in the non-residential sector. The report also warns about risks from inflation, high interest rates, and labour shortages.
“The signs are promising for the Canadian economy overall, but the construction industry faces lingering challenges. Labor shortages – due to growing demand for healthcare, infrastructure, data centers, and life sciences – are still impacting project delivery and budget,” said Patrick Ryan, Linesight’s executive vice-president for the Americas. “Multiple sectors are expanding in Canada, all of which will put increasing demand on materials.
“For example, we’re seeing two major gigafactories going up in Southern Ontario soon, and the government’s investments in healthcare, life sciences, and infrastructure will all be materials intensive.”
Report highlights:
- The construction industry is expected to shrink by 5.2 per cent in 2023 as the residential sector has declined more than expected. Regardless, construction is likely to grow by 2.7 per cent between 2025 and 2027, thanks to investment in the industrial, energy, and transportation sectors.
- Lumber prices are stable this year after two years of high volatility. Prices picked up due to the wildfires in June of 2023. Though prices may appreciate slightly in the coming months, the trend in coming quarters looks to be one of weakness due to the housing downturn.
- Copper prices have dropped 5.5 per cent in Q2 2023 and stabilized but are likely to be volatile for the next two quarters, influenced by high interest rates and weakening residential construction on one side, and investment in electric vehicles and renewable energy on the other.
- Steel rebar prices are down from 2022 highs and likely to continue edging downwards in the months to come. Demand for steel will be driven by significant infrastructure investment, with upward pressure limited thanks to cheaper steel imports and easing production costs.
- Cement costs have continued to increase due to stricter environmental regulations but will likely drop in the coming quarters. Prices are rising at a slower pace than before and an awaited drop in production costs and construction output may help prices decline.
- To read the full report, click here.