CCA’s economic report highlights positive trends in construction outlook
Despite being considered a major generator of greenhouse gas (GHG) emissions, findings from the Canadian Construction Association’s (CCA) Construction Quarterly Economic Insights, published in October 2024, report that the construction industry’s energy consumption is trending downward.
While emissions from construction have seen a slight uptick—driven by increased activity in infrastructure development—the industry is making remarkable progress in other areas. Looking at GHG emissions on a per capita basis shows that energy emissions in construction have decreased by approximately 16.5 per cent since 2005. This demonstrates that the industry is striving to balance growth with responsible energy use, even as the demand for housing and infrastructure increases.
The construction sector is also rethinking its approach to materials. GHG emissions related to material production have been declining, with emissions from aluminum, cement, and steel dropping by 43.5 per cent, 41.6 per cent, and 26.5 per cent, respectively.
Other key insights
- Slight slowdown in economic growth amid lower inflation: Canada’s economic activity showed a slight slowdown in the second quarter of 2024, with GDP growth at 0.5 per cent, down by 0.01 per cent from the previous quarter.
- Loosening monetary policy: Inflation dropped to two per cent in August, meeting the Bank of Canada’s target for the first time since 2021. In response to easing inflation pressures, the Bank implemented its third consecutive interest rate cut, lowering the overnight rate to 4.25 per cent, with more cuts anticipated later in the year.
- Construction sector performance: The construction industry contracted in the second quarter, primarily due to a significant downturn in residential construction. However, engineering construction remained strong, contributing positively to overall industry activity, while non-residential construction marked its tenth consecutive quarter of growth.
- Material costs: The Industrial Product Price Index (IPPI) increased by 2.6 per cent, and the Building Construction Price Index (BCPI) rose by 1.1 per cent. Although these figures indicate growth in material costs, they are significantly lower than the record highs experienced during the pandemic, when the IPPI peaked at 6.4 per cent and the BCPI reached four per cent.
What’s ahead for the industry?
With inflation stabilizing and further interest rate cuts expected, Canada’s economy is poised for a potential soft landing by early 2025. Nonetheless, challenges remain, especially with labour shortages and intense competition for skilled workers. Ongoing political and trade uncertainties, such as the U.S. elections and geopolitical tensions, also could pose risks to supply chains, affecting the costs of construction materials.
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.