Executive summary

US trade policy contributes to a challenging market environment

Canada’s economic outlook is becoming increasingly unclear. While activity has held firm in recent quarters, signs point to a slowdown ahead as businesses and consumers brace themselves for the potential fallout from the United States’ erratic trade policy.

In the absence of tariffs, Canada’s construction sector data would suggest green shoots of recovery. Yet, geopolitical headwinds are likely to decrease confidence, subdue decision making and impair growth prospects.

The constructions input cost environment was benign as well, with material costs recalibrating from pandemic induced highs and construction labour market slack increasing due to subdued workloads. However, US tariff enactment and Canadian government countermeasures have led to increased volatility, forward purchasing and stockpiling – elevating costs.

Uncertainty is also likely to nudge risk allowances north and widen contingency levels. However, these effects may be short-term in nature and longer-term challenges associated with investment indecision and weaker demand could outweigh immediate issues. With fewer projects on offer, bid prices could moderate despite cost pressures.

In a rapidly shifting landscape, agility will be essential in mitigating potential disruptions while capitalizing on emerging opportunities. Fortunately, the construction industry is no stranger to change and is well placed to adapt and evolve, which will be vital to sustaining growth and navigating uncertainty in 2025 and beyond.

In a nutshell

0.6%

Quarterly GDP growth as of Q4 2024

1.1%

Quarterly construction GVA growth as of Q4 2024

2.0%

Bid price inflation (escalation) estimate for 2025

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