CONSTRUCTION MARKET OVERVIEW
Public workloads pick up the slack
Canada’s construction sector weakened in Q1 2026, with industry GDP declining by 1.3% on the quarter – its second drop in a row. This contraction was led by a 4.2% fall in engineering construction, reflecting a pullback in investment in engineering structures and broader capital-intensive projects. This is consistent with a wider slowdown in business investment, which has been trending downward amid trade tensions and lower private-sector confidence.
Residential construction also edged lower (-0.3%), marking its third consecutive quarterly decline, while repair activity remained unchanged (0.0%) and non-residential posted modest gains (+1.5%), highlighting an increasingly uneven profile across the industry.
Source: Statistics Canada
Large amendments to the April 2026 Investment in Building Construction (IBC) data saw overall investment increase by 1.9% in Q1 2026 – compared to the 1.5% decrease posted for March 2026. While figures are typically subject to small revisions over time, this scale of change is not common. As a result, interpretation of specific figures is less valid than usual, although board themes can be gleaned from the data.
Public and policy-led investment is increasingly sustaining construction activity, particularly as governments advance education, healthcare and other infrastructure spending priorities to support economic stability. In contrast, residential segments remain more exposed to private financing conditions, cost pressures and investor confidence.
Looking ahead, this variance between residential and non-residential construction is expected to persist, especially in the near-term. Publicly backed projects will continue to provide a floor for overall activity, while any meaningful rebound in residential construction will likely be contingent on broader macroeconomic stabilization.
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