Canada’s construction industry will face strong demand, modest cost growth, stable prices and continued labour shortages in 2024, according to a report from global real estate company JLL.
The “U.S. and Canada Construction Trends 2024” report details a positive outlook for the industry in both countries. According to JLL’s findings, firms will see greater success after a year of stabilization, thanks to strong demand and the continuing normalization of supply chains and material prices. Further, the forecast explores the opportunities and challenges facing the construction industry in the year to come.
Supply chains improved in 2023, with the Global Supply Chain Pressure Index hitting a historical low in October, and almost all material divisions seeing stable or improving lead times. In 2024, slowing private-sector construction starts should keep supply chain pressure manageable, but the current pipeline and increase in publicly funded construction is anticipated to prevent price reductions.
In Canada, construction activity will likely continue to slow for the next few quarters. However, if inflation continues to slow and debt markets stabilize, increased builder confidence could lead to a rebound in launches beginning in spring 2024. Material costs are expected to increase by three to five per cent, employee wages are expected to increase by four to six per cent, with total costs expected to rise by three to six per cent.
“With cost pressures easing on the materials side, most of the current cost inflation can be attributed to rising wages,” said Scott Figler, national research director for Canada at JLL. “Canada’s construction wages were generally up by five per cent to seven per cent from 2022 to 2023, and we expect high wage growth to continue well into 2024 at around four per cent to six per cent.”
In the U.S. and Canada, as the industry faces skilled labour shortages and falling productivity, competency and efficiency will be increasingly valuable among the workforce. Retention, upskilling, and trust building are critical for the next year and beyond.
“Looking forward, success requires building durable partnerships with those who have not only the required technical ability, but also the soft skills necessary for problem-solving and innovation in the face of uncertainty,” said Rob Ramsay, executive vice president and national lead, project and development services, JLL Canada.
