Tariffs and turbulence

Construction market outlook 

Construction activity improved, supported by sustained infrastructure investment and resilient engineering workloads. Public-sector spending remains a key source of stability, although market conditions continue to diverge across sectors and regions as developers respond differently to market conditions and heightened uncertainty.

Construction workloads are expected to grow through the rest of 2026, led by institutional projects and ongoing infrastructure initiatives, while residential markets continue to face headwinds, especially in major cities like Toronto. Construction activity should improve further in 2027 and 2028 as economic growth strengthens and market sentiment improves, supporting a recovery in residential workloads and broader private-side investment. 

Input costs 

Input cost pressures have intensified as energy markets and supply chains react to ongoing geopolitical instability. Materials and machinery and equipment costs ticked up with tariff tensions threatening the immediate outlook, while pockets of skilled labour shortages continue to affect labour supply, elevating overall construction costs. Industry experts continue to highlight weaknesses in the training pipeline, and combined with subdued productivity, these dynamics point to increasing competition for construction labour. 

Bid price escalation 

As a result, escalation risks have become increasingly skewed to the upside as rising energy prices and supply chain disruption stemming from the conflict in the Middle East have heightened cost pressures. While competitive tendering and uneven demand continue to moderate bid price growth in some sectors and regions, ultimately tariffs, uncertainty and instability are expected to place additional strain on pricing.