Canada’s Construction Industry: Industrial Outlook Summer 2005

Booming engineering construction, especially in the oil and gas sector, is propelling the overall construction industry to another strong year, with output expected to grow by 6.9 per cent, employment by 4.6 per cent and total profits by 29.9 per cent in 2005.

But this strength masks a softening in both the residential and non-residential sectors of the construction industry. Although housing starts will stay high by historical standards, residential construction activity has peaked and will slow due to rising interest rates and the fact that pent-up demand has been exhausted. And although commercial expenditures are growing significantly, non-residential construction is showing signs of fragility, due to a declining investment in hospital and schools.

Overall, profit margins will rise to $4.6 billion, from $3.5 billion in 2004. However, rising costs will cause margins to slip somewhat in the coming years and keep dollar profits from returning to their 2005 peak anytime in the next four years.