Executive summary
As the inflationary threat recedes, will insolvency take its place?
Canada’s economy ended 2023 on a positive note, with Gross Domestic Product (GDP) rebounding in the final quarter and outperforming the Bank of Canada (BoC) forecast made this time last year. Yet growth remains slow and 2024’s prospects look subdued.
Construction industry output fell in all four quarters of 2023, though there were bright spots in the buoyant industrial and manufacturing, natural resources and infrastructure subsectors. By contrast, residential workloads are still reeling from persistently high interest rates and suppressed investment levels.
Wide variations can also be found at a provincial level. Built-up regions with major residential commitments, such as Ontario and British Columbia (BC) are weaker, while Alberta remains a hub of construction activity.
The picture is more positive on cost escalation. Bid price growth is slowing, helped by material cost reductions and an easing of labour and machinery cost pressures.
However, another warning light flashes on the construction industry’s dashboard. The number of contractors becoming insolvent in the year to February 2024 has surged and insolvency may become a notable barrier to project success.
This edition of the Canadian market intelligence report will explore this evolution in the threat landscape and identify how clients and their project teams can identity and pre-empt insolvency risk.
In a nutshell
0.2%
Quarterly GDP growth as of Q4 2023
-0.7%
Quarter on year construction GVA growth as of Q4 2023
3.0%
Bid price inflation (escalation) estimate for 2024
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