OTTAWA — The Canadian Construction Association (CCA) has released a Q3 economic report with new analysis of the labour market, inflation and business optimism.
The ICIC Construction Sector Quarterly Insights, Q3 2022 report notes global economic growth projections for Q3 and Q4 were reduced as central banks continue to tighten monetary policy moving into 2023.
Meanwhile, workforce shortages and inflation issues may persist, further slowing national economic growth.
The report includes information from the latest Canadian Survey on Business Conditions for Q3, a survey by Statistics Canada. Respondents in the construction industry cited inflation (72 per cent), the rising cost of inputs (62.2 per cent) and recruitment and retention of skilled employees (51 per cent) to be obstacles to growth through the next quarter.
Although future economic growth may soften, nearly three-quarters of businesses surveyed, including those in construction, remain optimistic about their future outlook over the next 12 months.
Construction investments have continued an upward trend since October 2021, according to the Bank of Canada’s Business Outlook Survey. Investment in non-residential construction rose five per cent in Q2 2022 above the pre-pandemic high seen in Q1 2020, reaching $5.34 billion in July.
Over the last two years, the construction industry has experienced growth in part due to the large financial supports made by governments in response to the COVID-19 pandemic. However, the report states, the momentum driving the construction sector has softened as of late as changes in the macroeconomic environment start to weigh on investments and take a toll on global expectations of economic activity.
As central banks fight rampant inflation around the world and as the Bank of Canada tries to lower inflation growth back to its two per cent target, rising interest rates are gradually slowing down economic growth.
Industries sensitive to interest rate changes, such as construction, are feeling these changes faster than others. Firms consulted for the Business Outlook Survey by the Bank of Canada felt the economy is falling back to normal levels following the fast economic recovery from the pandemic.