The Construction Monitor Q2 2023 report by The Royal Institution of Chartered Surveyors (RICS) and the Canadian Institute of Quantity Surveyors (CIQS) revealed the construction sector is demonstrating resilience in an uncertain economic environment.
Some of the key highlights from Construction Monitor Q2 2023 include:
- Workload trend still firm despite broader economic challenges.
- New business enquiries at highest reading in five quarters.
- Infrastructure feedback particularly strong, while other sectors also remain resilient.
- Skills shortages continue to hinder projects.
The Construction Activity Index edged a little higher from +23 per cent to +28 per cent, fed mostly by infrastructure projects, while skills shortages, such as those across the border in the U.S., continue to stifle activity.
This picture is broadly replicated across the industry apart from the micro sector, but even there, respondents are only slightly less positive than they were in Q1 (+22 per cent against +25 per cent). In terms of the regional view, the numbers for Alberta are particularly strong, benefitting from the focus on natural resources; while the results for British Columbia and Quebec remain in a more modest positive territory.
It is clear from the results that the investment programme in infrastructure across the country is gathering pace. The net balance reading for workloads in this area of the industry rose from +34 per cent to +41 per cent, with respondents stating that energy and transport are seeing the strongest growth.
It appears the industry is confident that the current momentum will continue, although there remains some risk that a mild recession might emerge in the second half of the year. Significantly, the metric capturing new business enquiries jumped to +38 per cent from +21 per cent, which is the best net balance reading in five quarters. This is also reflected in workload expectations for infrastructure over the next twelve months, where the net balance stands at an encouraging +46 per cent. This upbeat mood is also replicated in the results for non-residential workloads (+34 per cent) and residential (+22 per cent).
The Bank of Canada’s monetary tightening, as seen in many other nations, is causing financial constraints and a somewhat more restrictive lending environment. However, these pressures have been contained for now. While around two-thirds of the respondents report financial constraints as holding back activity—it is the same proportion as the past four quarters.
“With all the talk of inflation, continually rising interest rates, and an expected economic slowdown in the latter half of this year, it was invigorating to read that the workload in the construction sector stands firm, not only in infrastructure, but also (more moderately) in the residential and commercial sectors, with an overall positive outlook across Canada,” says Sheila Lennon, CEO of CIQS.
