Labour shortage a key factor limiting Canada’s construction industry recovery

A lack of skilled workers and several large government infrastructure projects are making it difficult for the Canadian construction industry to recover

Global construction consultant Linesight released its Canada Country Insight and Commodity Report for Q1 2023 and whilethe report predicts moderate economic growth in Canada and a return to normal commodity escalation, the construction industry is expected to contract by 0.9% in 2023 due to reduced residential output, elevated construction costs, and a shortage of skilled labor. While supply chain pressures are easing out, we continue to experience long lead times for generators and specialist electrical equipment.  

Canada’s industrial construction sector is expected to remain robust, with a forecasted growth of 14.9% in 2023, supported by increased investment and permits for industrial construction, as well as the government’s efforts to establish Canada as an industrial hub. The life sciences sector is also expected to grow due to investor interest and government policy support. 

Patrick Ryan, Executive Vice President for the Americas at Linesight, says, The reduction in inflation rates is positive for the industry and the outlook is improving with lower energy costs, improved supply chain conditions and significant growth in infrastructure and mission critical investments. However, the ongoing lack of skilled workers in Canada continues to pose a risk for the construction industry.” 

The data in the report suggest that: 


    • Lumber prices have continued to drop in recent months from the highs reached in the first half of last year primarily as a result of the decreasing demand in the residential sector. 
    • Higher energy costs have been a key factor in the recent upward trend in cement and aggregates prices. Increased environmental regulations on production will contribute to further upward pressure on prices in the coming quarters. 
    • In addition to improved demand for steel, prices rose on the back of higher input costs, lower import volumes and reports of domestic mill production delays. However, with supply improving, prices are set to fall from recent highs posted in late March. 
    • Diesel prices dropped below CA$7 per gallon in March for the first time since February last year. With further drops in diesel prices will be contained. 

“The residential construction continues to slow” says Ryan, “but government investment in key sectors such as industrial will help boost the industry as a whole provided there is some easing of the current skilled labor shortages which is curtailing the growth opportunities.”    

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