RC123 MarApr 2026 - Magazine - Page 8
LEADERSHIP
2026
OUTLOOK
NAVIGATING TURBULENCE
Lessons from the data for Canadian construction
by Ashish Jain and Michelle Throssell
2
Ashish Jain is the
Managing Director,
Canada, at Turner &
Townsend.
Michelle Throssell is the
Director and Head of
Infrastructure, Canada at
Turner & Townsend.
All bets on infrastructure
Canada’s economy faced notable uncertainty and signi昀椀cant
tari昀昀 headwinds in 2025 yet remained resolute. At the time
of writing, Gross Domestic Product (GDP) is expected to
increase by 1.7 per cent, with the Bank of Canada forecasting
a modest expansion of 1.1 per cent in 2026.
And while construction GDP advanced by 2.6 per cent on
the year in Q3 2025, this belies the challenges the industry
has faced. Persistent cost pressures, tempered con昀椀dence
and liquidity constraints have all contributed to a subdued
and increasingly polarised construction industry.
Sluggish private sector investment has been a hallmark of
2025, with increasing geopolitical tension and growing trade
barriers negatively a昀昀ecting investment decisions—most
notably in the residential market.
The RPS House Price Index fell for its 昀椀fth consecutive
month in November 2025 and residential building permits
contracted by 8.5 per cent on the year in Q3 2025. Pre-sales
are also subdued, foreshadowing a di昀케cult start to 2026.
Industrial investment in building construction is also
su昀昀ering, falling by six per cent on the quarter in Q3 2025.
Part of this vulnerability is linked to overbuilding in 2024, but
trade-related uncertainty has also taken its toll on growth.
8—RENEW CANADA – MARCH/APRIL 2026
Public spending, however, is anchoring construction
activity as infrastructure investment and defence
spending support immediate growth and boost longterm productivity. Civil engineering GDP jumped 4.4
per cent on the quarter in Q3 2025, hot on the heels
of Bill C-5 gaining Royal Assent. This outsized gain
accounts for the bulk of the recent industry GDP
improvement.
Alongside the Major Projects O昀케ce (MPO), and Bill
C-15’s scope to build one Canadian economy, targeted
investment in infrastructure will bolster growth
by reducing red tape and accelerating approvals.
Institutional and governmental investment in building
construction continues to strengthen as well, with
growth unbroken since Q3 2023.
Despite overall workloads currently being suppressed, there is scope to see recovery as 2026 unfolds.
As such, it is important to delve deeper into the detail
of recent in昀氀ationary trends and evaluate longer-term
supply and demand dynamics which could in昀氀uence
construction cost escalation for the years ahead.
Progressive inflation
After an uptick following the imposition of tari昀昀s by
the United States, and countermeasure tari昀昀s by the
Canadian government, in昀氀ation alleviated toward
the end of 2025. Both October and November saw
the Consumer Price Index (CPI) decelerate to 2.2 per
cent—0.2 percentage points above the Bank of Canada’s
target of two per cent.
In construction, materials cost growth has been
more bullish. As of November 2025, a weighted basket
of materials and components tracked by Turner &
Townsend increased by 3.4 per cent on the year.
Beneath the surface, movement is more pronounced.
Over the same period, copper pipe and tube and
copper cable increased by 14.6 and 5.2 per cent,
respectively. This spike was driven by strong demand
from mechanical and electrical trades, constrained
global supply and US import tari昀昀s that have tightened
availability and pushed up costs.
RENEWCANADA.NET
GETTY IMAGES
025 MARKED A YEAR of transition for Canada’s economy
and construction sector following a step-change in
international trade policy and further retrenchment
from globalization. Economic growth has resultantly softened, giving way to an uneven recovery, and
while conditions have begun to stabilize, progress is
not uniform.
Public programs and infrastructure pipelines have anchored
activity while private investment remains selective. Yet
persistent input cost pressures and productivity challenges
continue to shape delivery and 昀椀nancing constraints have
kept many projects on the sidelines.
By analysing and evaluating relevant data, what can
clients learn about the construction industry? How can they
move from reactive coping to proactive delivery, and how do
they secure certainty in a market that is stabilizing, but still
far from predictable?
