The Canadian Construction Association (CCA) released the summer edition of its Construction Quarterly Economic Insights report, highlighting a softer economic outlook for Canada and growing challenges for the construction industry. Construction sector GDP contracted by 1.3 per cent in the first quarter of 2026, while building construction investment also declined as economic uncertainty weighed on activity.
“The construction industry continues to build through uncertainty, but contractors are facing increasing pressures in getting the job done,” said Rodrigue Gilbert, president of the CCA. “Slowing economic growth, along with a volatile trade environment, is creating added costs and administrative burdens across the industry.”
While activity weakened in the first quarter, the report points to areas of resilience. Commercial and institutional investment continued to grow, labour demand remained relatively strong, and permit activity suggests pockets of future growth in residential and industrial construction. The report also examines the impact of ongoing Canada-U.S.-Mexico Trade Agreement negotiations, sector-specific tariffs and expanding domestic material requirements, which are increasing compliance obligations for contractors and placing further strain on project delivery across the country.
“Canada’s housing, infrastructure and economic ambitions depend on a construction sector that can deliver projects efficiently and competitively,” said Gilbert. “As governments advance major investments, it will be critical that we do everything possible to unlock the full potential of our country’s construction industry, with policies that support, rather than hinder, project delivery.”
Highlights from the report include:
- Economy stalled in Q1, with a softer outlook ahead: Canada’s real GDP slipped at an annualized rate of 0.1 per cent in Q1, as higher imports and weaker investment offset growth in other areas. Business capital spending fell for a fifth consecutive quarter, while weapons system spending pulled back after the late-2025 surge. Overall, growth is expected to remain softer through 2026.
- Construction activity continued to cool: Construction GDP contracted 1.3 per cent quarter-over-quarter, driven by a 4.2 per cent drop in engineering and other construction activities. Building construction investment declined by 1.5 per cent, with weakness in the residential sector outweighing gains in commercial and institutional construction. Building permits were broadly flat, with improving single-residential and industrial intentions offset by weaker commercial and institutional permits.
- Inflation continues to rise in steelheavy divisions: Overall construction price inflation eased in Q1 across most divisions, regions and building types. However, structural steel framing and metal fabrication costs were still about 10 per cent higher than a year earlier. Inf lation was lowest for high-rise apartments and highest for factories.