By Canadian Contractor staff
JLL releases data on Canadian construction outlookCanadian Contractor editor pick
April 6, 2023, Ottawa – JLL released their 2023 Canada construction outlook. The report looks at how raw material price hikes, labour shortages and rising capital costs will impact construction momentum across the country.
Key trends identified by the report in Canadian construction were as follows; demand for residential construction due to Canada’s housing shortage and increased immigration and labour shortage across many trades groups due to a spike in retirements.
It is predicted that in 2023, different levels of government will begin to greenlight trades projects and initiatives that will aid in these down-turning trends.
“The trajectory of the looking economic downturn will likely dictate the outlook [on construction]. A deeper recession will make this riskier and will lead to a falling supply. If the recession does not materialize or is less severe than expected, we may except to see more [construction],” states the outlook report.
An increase in residential project cancellations and delays throughout 2022 were a result of higher-than-anticipated construction costs with less certain final demand being met. The report states that more than 10,000 units expected to be completed in 2022 were delayed.
Labour shortages are putting upward pressure on construction wages. Statistics Canada estimates job vacancies sit at 4.2 per cent across the economy, but 4.99 per cent across construction trades. This is well above the 10-year average of 4.1 per cent for construction. These unfilled positions peaked in early 2022.
Despite these vacancies, construction employment has been strong, “suggesting that labour cannot keep up with demand,” states the report.
The report states that construction industry advocates predict a potential shortages of 100,000 trades people by 2029 if no interventions are made.
The Canadian government has responded by promoting trades education with scholarships and specialized programs as well as investing in other means of gaining skilled tradespeople.
As a result of the employment shortage, many builders are offering higher wages and other incentives to new-hires, “who are often less experienced.” This ultimately leads to slower construction at a higher cost.
Full-time salaries are up 5.4 per cent from over a year ago, compared to the average increase of 4.9 per cent across all goods-producing industries and four per cent across service-providing industries.
Despite these high-than-normal wage increases, “the 6.8 per cent annual increase in inflation was higher than wage growth.”
JLL is a is a services firm that specializes in real estate and investment management. their research arm consists of more than 400 global research professionals across 60 countries.