CCA’s new economic report show construction holding steady despite shaky economic times
Despite lingering uncertainty around tariffs and trade, Canada’s construction sector continues to show steady progress, according to the Canadian Construction Association’s (CCA) latest Construction Quarterly Economic Insights . The summer 2025 edition breaks down how inflation, trade tensions, and public investment are impacting the construction sector.
Canada’s economy grew by 2.2 per cent in Q1 2025, following growth of 0.5 percent in the previous quarter. A big part of that early growth came from companies stockpiling goods ahead of new tariffs, a trend that has reversed since April. As tariffs persist and sticky core inflation undermines further monetary easing despite a softer labour market, rising public-sector spending is expected to play a key role in growing construction activity.
Key takeaways
- Construction holding steady: Industry output rose 0.22 per cent. While that’s more modest than the broader economy, it’s a stable gain for a sector that lacks export and inventory-driven spikes and absorbed higher imports. Year-over-year (YOY) output climbed 1.52 per cent, supported by a tentative housing rebound and solid growth in non-residential construction.
- Building material inflation cooling – at factory gate: Industrial Product Price Index (IPPI) inflation slowed to 1.17 per cent YOY in May due to a stronger Canadian dollar in April and May, lowering energy prices and contracting manufacturing production needs. Steel prices have climbed 3.38 per cent since February and cement costs are ticking up as well. This price measure captures factory-gate prices, before taxes and tariffs are added, so duties affect it only indirectly. Still, there is a growing gap between production costs and final consumption. The Building Construction Price Index (BCPI) saw New Brunswick, Alberta, and British Columbia recording the highest regional gains.
- Record federal build-out: The federal government’s four-year, $50 billion construction plan from Prime Minister Mark Carney’s platform places the industry in its most constructive (literally and figuratively) policy position since the post-war highway boom. Excluding the prefab-heavy Build Canada Homes (BCH) program and $1.78 billion boost to the defence budget, fiscal spending could lift the construction sector’s GDP share by roughly five per cent—if procurement, permitting, and workforce capacity can keep pace with these deeper pockets.
What’s ahead for the industry?
The outlook for Canada’s construction industry in the second half of 2025 is positive, but conditions are complicated. Government-backed housing, infrastructure, and defense programs promise robust project pipelines, though many may not materialize until next year. Unresolved trade frictions and shifting sourcing rules keep material costs and supply chains in flux, while elevated insurance premiums and a pause in monetary easing squeeze margins. The pool of skilled trades remains tight, fueling shifts toward prefabrication. Faster federal approvals may shorten timelines. Builders that can adapt to these changes can turn today’s policy tailwinds into a lasting advantage.
For more information on this report or the work CCA is currently focused on to address the issues covered, please email Yunhan Liu, Analyst, Economics and Policy.