Canadian picture improving in RICS construction monitor
By Adam Freill
Construction Commercial Industrial Institutional ResidentialPromising growth seen across the board, although skills and labour shortages remain a key issue holding back the sector, says RICS and CIQS.
(Graph courtesy of RICS and CIQS)
Growth in workload across both the private residential and non-residential sectors in Q1 of 2024 has the Royal Institution of Chartered Surveyors (RICS) and Canadian Institute of Quantity Surveyors (CIQS) Construction Monitor indicating an improved picture for the Canadian market.
Expectations for the next 12 months are also look promising, say the two organizations, with increases in sentiment across the board. However, the sector is not without its challenges, with skills and labour shortages still cited as a real issue for the industry.
The Construction Activity Index, a survey indicator that explores a general picture of activity across the sector, has improved from +12 in Q4 of 2023, to +24 in Q1 of this year.
On a regional level, the strongest increase was registered in the Prairies, which rose to +50. British Columbia also saw a noticeable improvement, where the index rose to +21 from +8.
Although infrastructure remains the strongest performing sub-sector in terms of net balance, the latest reading of +24 is more modest than the recent high of +41 recorded in Q2 2023.
The private residential sector reported in with a nice increase, going from -10 in Q4 to +18, and with a net balance of +7 private non-residential workloads were also up in Q1, gaining from the -3 of Q4 in 2023.
Labour shortages were referenced by survey respondents as factors seen to be holding back market activity, says the report. While the picture is slightly better than the previous report, over two-thirds of respondents highlighted the scarcities. Cost of materials was also a factor in sector’s performance.
“Most impactful is the shortage of skilled workers, which results in subcontractors being very selective in the work they are pursuing,” said a participant from Calgary [the report authors don’t identify commentors]. “This ultimately results in a much smaller pool of trade partners a general contractor can collaborate with, hence a much higher construction cost than what could be in a more competitive market.”
Despite the challenges, profit margins are expected to rise, with the most respondents since 2022 indicating an expectation of industry profit margins over the next 12 months.
