Canada’s recovery continues despite high inflation and global uncertainty
Gerard McCabe
Managing Director, Canada
Our latest market intelligence report for Canada provides market analysis, sector insights, and supply chain capacity data for each province covered in the study. The Canadian economy is expected to grow at a good pace this quarter, although at a slightly slower rate than Q4 2021.
Economic outlook
Inflation has taken hold across the economy, increasing to an average rate of 6.7 per cent, the highest in decades. In April, the Bank of Canada changed its tone, indicating a need to be aggressive with inflation. As a result, interest rates increased by 50 basis points in April to sit at 1 percent. We expect this robust approach to be reflected at the bank’s next meeting in June.
The construction industry is feeling the impacts of inflation, but also global supply-chain bottlenecks resulting in variance in the rate of inflation between different product categories. While these factors are challenging businesses, their confidence is up significantly. The Ivey Purchasing Manager’s Index now sits at 66.3 in April which is halfway between February and March.
This signals that uncertainties around the pandemic are now easing, and companies are looking forward to fulfilling pent up demand, only to have their aspirations dampened by the global uncertainty, rising interest rates and high inflation.
The change in construction
Housing starts and building permits provide insight into the future demand for housing and commercial buildings. Housing starts fell in British Columbia, Alberta, Quebec, and Ontario. The drops were significant, falling 3 to 20 percent as housing across the country adjusts to a higher interest rate environment.
In comparison, the number of building starts increased. Quebec and British Columbia saw a strong jump in non-residential sector building permits due to several permits being issued for large hospital developments.
Supply chain capacity
The report also examines the market in relation to the capacity experienced for fit-outs, services, facades and structures. This is intended to give insight into the market capacity in each province covered by the report.
Bumps in the road to net zero for Canada’s resource sector
Canada contributes just 1.5 percent of global greenhouse gas emissions, which is minor compared to other countries, but almost 30 percent of these emissions are generated from the oil, gas and mining sectors combined.
Canada has emissions targets for 2030 and a net-zero target for 2050. In today’s interconnected world it is important to look at helping create a greener supply chain. We need to introduce greater innovation across the economy and prompt companies to work collaboratively in support of our future net-zero world.
For all the analysis and insights on the Canadian construction market, download the full report by completing this short form.
Canadian construction market report
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