Statistics Canada reports that in the first quarter of 2024, the industrial capacity utilization rate for the construction sector stood at 82.7%, marking a slight increase from the previous quarter’s 82.6%. These two quarters represent the lowest rates since Q1 2017 (82.5%), reflecting a significant drop from the peak of 92.9% in Q2 2021. Since tracking began in 1987, the highest rate recorded was 98.3% in Q1 1990. Historically, the construction sector has contended with various challenges, including seasonality, project types, and fluctuating labor and input costs.

Using data from the latest Canadian Survey on Business Conditions, we explore the current landscape of the construction sector, focusing on job numbers, trade certifications, productivity, and price indexes.

In Q2 2024, construction businesses identified rising inflation (52.2%) as the most common obstacle, followed by the rising cost of inputs (43.2%) and increasing interest rates and debt costs (40.7%). These concerns are in line with trends observed across all business sectors.

A significant challenge for construction businesses is the shortage of labor (37.8%), with recruitment (37.7%) and retention (28.2%) of skilled employees also posing major hurdles. These proportions are notably higher compared to other business sectors.

Supply chain challenges remain a critical issue, with 36.7% of construction businesses reporting worsened conditions. Among these, 88.2% have experienced increased delivery delays for inputs and supplies, and 65.7% are facing higher costs for these deliveries.

Despite these obstacles, the construction sector remains optimistic. In Q2 2024, 28.7% of businesses expected an increase in demand for their goods and services over the next three months, and 25.5% anticipated a rise in sales. Additionally, 81.3% of construction businesses maintained an optimistic outlook for the next 12 months, with 29.9% feeling very optimistic and 51.4% somewhat optimistic.

The job vacancy rate in the construction sector was 4.2% nationally in Q1 2024, down from 5.7% in Q1 2023, but still higher than the national average of 3.6%. The average hourly wage increased from $27.95 to $29.75 during the same period.

Trade certifications showed mixed trends from 2021 to 2022. Electricians saw a 3.8% increase in certifications, while heavy equipment and crane operators (-9.6%), plumbers, pipefitters, and steamfitters (-7.5%), and carpenters (-10.5%) experienced declines. However, new registrations increased for all trades except other construction workers.

In Q1 2024, labor productivity in the construction sector remained unchanged, with both output and hours worked increasing by 0.1%. Conversely, productivity across the overall business sector declined by 0.3%. Prices for machinery and equipment in the construction sector rose by 4.8% year-over-year.

The construction sector continues to navigate significant challenges, including rising costs and labor shortages. However, the sector’s resilience and optimistic outlook suggest continued growth and adaptation in the face of adversity. Stay tuned for more updates and insights into the construction industry’s evolving landscape.

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