CCA’s economic report highlights modest economic growth amidst trade tensions
Amidst a challenging economic climate marked by trade uncertainties and rising borrowing costs, the Canadian Construction Association’s (CCA) Construction Quarterly Economic Insights winter report highlights how trade policies and material dynamics are impacting the construction industry.
Canada’s economy grew modestly by 0.3 per cent in Q3 2024. While slower growth has eased inflation pressures, trade uncertainties have become a critical factor influencing costs and supply chains. The Bank of Canada has implemented five consecutive rate cuts, with more cuts expected in 2025 to stimulate investments. Nonetheless, geopolitical trade tensions could offset these gains, impacting key materials used by the industry.
Key takeaways
- Trade and tariffs: Canada’s reliance on imports for critical materials like steel, aluminum, and lumber makes the sector particularly sensitive to trade disruptions. Tariffs, often used as leverage in geopolitical negotiations, can increase project costs and delay timelines by causing supply shortages.
- Workforce in construction: The construction industry continues to demonstrate resilience despite broader economic headwinds. Employment levels in construction remain stable, reflecting strong demand for labour. As of Q3 2024, unemployment in the construction sector stood at five per cent, lower than the averages seen in the 2010s. Despite this, labour shortages and retirements will continue to impact productivity and project timelines.
- Construction’s economic output: The construction industry’s GDP experienced modest growth in Q3 2024, reflecting the industry’s resilience in navigating economic uncertainties. Engineering and other construction activities continue to lead the sector. Investments in multi-residential projects continued to drive growth, increasing during the third quarter.
- BCPI slows for five quarters, signaling eased construction costs: The Building Construction Price Index (BCPI) offers insights into how trade impacts construction costs. In Q3 2024, the BCPI decelerated. However, prices for key imported materials remain sensitive to tariff threats and currency fluctuations.
What’s ahead for the industry?
The outlook for 2025 is optimistic but not without risks. The construction industry’s success will hinge on its ability to adapt to shifting trade dynamics amid upcoming challenges. Potential material cost increases, driven by currency fluctuations and tariff threats pose significant risks. To navigate these uncertainties, the industry must focus on building resilient supply chains and reducing reliance on volatile import markets. By proactively addressing these challenges and leveraging opportunities through innovation and strategic planning, the construction industry can enhance its competitiveness and sustain growth in a complex global trade environment.
For more information on this report or the work CCA is currently focused on to address the issues covered, please email Mario Baker, Senior Analyst of Economics and Policy Development.