Bright future for Canadian Construction Economy in 2023-2024!?
According to research of Ranstad, the Canadian construction is about to increase it’s overall impact, creating new jobs and new homes. But is it all that Rosie? Find out here.
The fact is that Canadian construction sector is a massive industry, employing approximately 1.2 million men and women, or approximately 7% of the Canadian workforce. That’s a 50% increase in jobs from the prior decade. That increase in job creation is mostly due to increased immigration to Canada over the past years. And according to the Canadian Government plan, that trend will continue and will even surpass previous years. Canada is about to increase immigration to 500K east year!
That is positioning the construction industry of Canada for strong growth in the coming years as the stats show.
Big construction in planning stage
Big projects are on horizon for Canada. High-value projects are already in planing stage or even build at this moment. One big ambitious project is the 16-km subway line between Ontario Place and the Ontario Science Centre in Toronto or the replacement of the George Massey Tunnel on Highway 99, which crosses the Fraser River in Vancouver, British Columbia. Further more, the Governments of Canada and Albera have committed over $52.7 million to the completion of several infrastructure projects. The construction industry in Canada is expected to record a Compound Annual Growth Rate (CAGR) of 8.5% by 2024. That will make Canada’s construction sector worth a massive $354.9 billion (USD).
Construction decline in September 2022
Encouraging forecast from Ranstad has been shadowed by Statistics Canada data for September 2022 where investment in building construction declined 0.6 to $20.9 billion, with most of the weakness coming from Quebec (-3.4%). The residential sector decreased 1.3% to $15.4 billion. Conversely, the non-residential sector rose 1.6% to $5.4 billion.
“Single-family home investment declined 1.3% to $8.5 billion in September and has stayed around this value since May. Investment in multi-unit construction was down 1.4% to $7.0 billion. Quebec (-5.6%) caused most of the fall, with its fourth consecutive decline in this component following the peak in May”. Stats Canada
Grim predictions of RBC
Royal Bank of Canada was the first major bank to predict the Canadian economy will see negative growth in mid-2023. Now, it sees the downturn arriving as early as the first quarter of next year.
“Cracks are forming in Canada’s economy. And the pressure is still building,” economists Nathan Janzen and Claire Fan said in a report published on Wednesday. “More stubborn inflation trends over the coming months could yet prompt additional hikes, and a potentially larger decline in household consumption and a deeper recession.”
“The pain of the upcoming recession won’t be distributed equally among Canadian businesses and households,” according to the report. The manufacturing sector will likely be among the fist to pull back, the economists said.
What to expect in 2023?
Probably at this point, every investor will tell you that no one has a crystal ball to look into the future. As many are careful with their investment and buying power, many are holding back and realize the mixed trend in economy. Raging war in Ukraine, danger of Cold War between US and Oil rich countries certainly don’t help when it comes to making new and encouraging old investors. Holding back on investing into Canadian construction means a slow downturn at best. Canadian immigration can certainly help in upsetting the trend but will it be enough to stop the recession? If we listen to RBC and Stats Canada, the recession is imminent. The question is when and how much? How much will this impact Canadian construction sector and construction workers will certainly depend on Governments investment into this same industry.
Read more on Canadian economy predictions for 2023.
