Canada’s construction sector remains positive in Q2

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The Royal Institution of Chartered Surveyors (RICS) / Canadian Institute of Quantity Surveyors Construction Monitor Q2 2024 revealed that overall sentiment remains positive and to a similar extent as in the first three months of the year. Construction activity came in at +23 as against +24 in Q1, so barely changed and still growing. Interestingly, this figure is similar across construction firms of all sizes, indicating a consistent picture across the sector.

Current workloads continue to grow and like many other construction sectors across the globe, including the United States, infrastructure leads the way on sentiment toward growth. Within infrastructure projects, the strongest areas of growth appear to be in energy and transportation.

New housing project starts, prices and sales remain a little more subdued, but the RICS-CIQS dataset is designed to capture ongoing development work rather than new spades in the ground or completion transactions. Meanwhile, the office and retail construction sectors continue to indicate negative trends. Looking at credit conditions, at the time the questionnaire was open, the Bank of Canada had only made one cut in interest rates but since survey field work closed, it sanctioned a further quarter point move. Moreover, what appears to be a dovish pivot by the Bank of Canada, is fuelling the suspicion that further monetary accommodation will come through quicker than markets had previously anticipated. This promotes a more hopeful outlook.

Both skills and general labour shortages are the two critical factors identified by respondents as holding back market activity. In each case, around two-thirds of respondents highlighted such scarcities, albeit the Q1 shares (66 per cent for skilled trades and 61 per cent for general labour) are marginally lower than last time. Looking at this issue in a little more detail, it is the area of skilled trades where the survey suggests the recruitment challenges are most severe. That said, around one-half of contributors indicated problems in sourcing quantity surveyors while 40 per cent mentioned project managers.

“The Bank of Canada has forecasted an economic growth increase for the remainder of 2024 and into 2025, which should result in us seeing a continued momentum in the infrastructure sector.  The interest rate cut in July along with market stipulating that further cuts in 2024 are forthcoming, should lower mortgage rates, making it more financially palatable for builders and owners to take on new mortgage debt loads in both the residential and non-residential sectors to help stimulate an increase in workload in these sectors,” says Sheila Lennon, CEO, CIQS.