The construction sector is not operating at full capacity—here are some data that could explain why

July 4, 2024, 11:00 a.m. (EDT)

The industrial capacity utilization rate (the ratio of actual output to potential output) for the construction sector was 82.7% in the first quarter of 2024, a slight uptick from 82.6% in the previous quarter.

These were the two lowest quarterly rates since the first quarter of 2017 (82.5%), and more than a 10-point drop from the second quarter of 2021 (92.9%). Since we started tracking capacity utilization in 1987, the industrial capacity utilization rate has gone as high as 98.3% in the first quarter of 1990.

Historically, the construction sector has always faced challenges, including seasonality, the type of project, as well as labour and input costs.

Using the latest data from the Canadian Survey on Business Conditions, let’s have a look at what businesses in the construction sector have been telling us—along with a look at our latest data on job numbers, trade certifications, productivity, and price indexes related to the sector.

Rising inflation and input costs, labour recruitment, retention among the most expected obstacles

In the second quarter of 2024, rising inflation (52.2%) was the most commonly expected obstacle among construction businesses, followed by the rising cost of inputs (43.2%) and rising interest rates and debt costs (40.7%)— proportions which were similar to those for all businesses (54.4%, 44.6% and 40.6% respectively).

The next most expected obstacles for construction businesses were a shortage of labour force (37.8%), followed by recruiting (37.7%) and retaining (28.2%) skilled employees—proportions which were considerably higher than those for all businesses (24.9%, 31.3% and 21.9%, respectively).

Among construction businesses that expected supply chain challenges over the next three months, more than one-third (36.7%) said that supply chain challenges have worsened. Of those, close to 9 in 10 (88.2%) said these challenges have increased delays in deliveries of inputs, products or supplies, while just under two-thirds (65.7%) reported paying more for such deliveries.

Increased demand and sales, and high optimistic outlook all expected

Despite these headwinds, business is not slowing down, nor is optimism.

In the second quarter of 2024, close to 3 in 10 construction businesses (28.7%) expected an increase in demand for their goods and services over the next three months, while just over 1 in 4 (25.5%) expected an increase in sales.

Meanwhile, more than four in five construction businesses (81.3%) had an optimistic future outlook over the next 12 months, with 29.9% feeling very optimistic and 51.4% feeling somewhat optimistic.

Job vacancy rate down, number of certifications varied, productivity unchanged, prices for machinery and equipment up

In the first quarter of 2024, the construction sector’s job vacancy rate was 4.2% nationally (on a seasonally adjusted basis), higher than the overall national rate (3.6%), though down from 5.7% in the first quarter of 2023. The average offered hourly wage (unadjusted) increased from $27.95 to $29.75 over the same period.

From 2021 to 2022, the number of certifications increased for electricians (+306; +3.8%), and other construction workers (+39; +26.5%), but decreased for heavy equipment and crane operators (-228; -9.6%), plumbers, pipefitters and steamfitters (-327; -7.5%), and carpenters (-465; -10.5%). New registrations were up for all these trades, except for other construction workers.

In the first quarter of 2024, labour productivity in the construction sector was unchanged, as output and hours worked each edged up 0.1%. Across the business sector overall, productivity declined 0.3%, reflecting slight growth of 0.1% in output and a rebound of 0.4% in hours worked.

In the same quarter, prices paid by the construction sector for machinery and equipment (domestic and imported) increased 4.8% year over year.

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Contact information

For more information, contact the Statistical Information Service (toll-free 1-800-263-1136514-283-8300; infostats@statcan.gc.ca) or Media Relations (statcan.mediahotline-ligneinfomedias.statcan@statcan.gc.ca).