Executive summary
Uncertainty persists, but confidence improves following interest rate adjustments
The Canadian economy started 2024 on a positive note, lifted by a softening of inflation, followed by a trim to interest rates. Confidence has risen as a result, but the real impact is likely to be felt next year as the economy continues to disappoint.
Construction has improved, recording output growth for the first time since 2022. Institutional and governmental construction spending is buoyant and targeted residential incentives from the Federal Budget 2024 may well be filtering through into some new housing starts.
Little change is evident from a provincial perspective, with performance largely stable and in a similar position to the previous three months. Notable changes come from Quebec, with a glut of housing starts set to bolster residential activity levels in the coming quarters.
From a supply chain perspective, input costs have hardened. Many construction materials increased in Q1 2024, following raw material cost growth. Labour and machinery and equipment costs march onward as well, albeit at softer rates of growth.
Escalation has also firmed up, with input cost increases filtering through into bid price growth expectations alongside a slight improvement from a demand perspective.
Overall, the outlook is more positive for the Canadian economy and its construction industry as the second half of 2024 begins. Prospects for the remainder of the year, however, remain finely balanced.
In a nutshell
0.4%
Quarterly GDP growth as of Q1 2024
0.1%
Quarter on year construction GVA growth as of Q1 2024
3.25%
Bid price inflation (escalation) estimate for 2024
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