EXECUTIVE SUMMARY

A year to build on

Canada’s economy lost momentum in 2025 as softer trade conditions, labour market cooling and heightened geopolitical risks weighed on activity. Yet there is a sense of cautious optimism for the year ahead despite 2026 beginning on unsteady foundations.

The construction sector saw broad-based improvement and proved resilient against an increasingly uncertain backdrop. Public‑sector work continues to ground activity, though growing divergence between federal expenditure priorities and provincial fiscal tightening leave certain markets facing investment balancing acts.

Input cost growth has begun to re‑emerge, driven by tariff constraints and supply chain disruptions over 2025. Elevated oil prices remain a risk for the construction industry’s cost base in 2026, albeit increased labour market slack has helped to contain these pressures for now.

Bid price escalation should remain modest in the near term as subdued workloads promote healthy competition. However, 2027 and 2028 are likely to bring renewed escalation growth and increased capacity constraints as pipelines recover and backlogs fill-out amid growing infrastructure demand.