Construction outlook in Canada and US promising, but materials prices and labour shortages are creating real challenges: RISC

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Ottawa Construction News staff writer

The Canadian and US construction outlook is the highest since 2019, but labor and materials costs project to be impediment, says the Royal Institute of Chartered Surveyors (RISC).

“Feedback from respondents based in Canada and the United States suggests that activity in the construction industry is continuing to gain momentum,” RISC says in its Global Construction Monitor for the fourth quarter of 2022.

“The headline Construction Activity Index (CAI) for the former (Canada) actually edged down from +46 to +40, but remains at a level indicative of a very solid performance from the sector. Meanwhile for the US, the reading rebounded from +34 to +47 and now stands at its best level since the fourth quarter of 2019.”

“As elsewhere around the world, respondents in Canada and the US are continuing to highlight concerns about both the availability and the cost of building materials,” RISC says.           The skilled labor shortage also is creating challenges.

“Around three-quarters of respondents in both countries identified the shortages of skilled trades as a critical issue with some two-thirds drawing attention to challenges around the recruitment of quantity surveyors and project managers.

“Expectations around hiring over the next twelve months are, nevertheless, still strong, with the net balance readings coming in at +47% in Canada (marginally down from +54% in Q3) and +58% in the US; this compares with +50% previously. These ambitious plans are likely to result in further upward pressure on wages. Projections from respondents suggest that the increase in skilled labour costs is likely to be in the region of 5 to 6% over the next year.”

“Construction activity in North America remained firm into the year-end according to the feedback received from survey respondents, with expectations for 2022 strongly positive in the US,” said RISC chief economist Simon Rubinsohn. “Predictably, infrastructure is viewed as likely to play a particularly important role in driving workloads, reflecting the initiatives taken by the administration in response to Covid pandemic.

However, it is significant that acceleration in activity through the year is actually viewed as being pretty broadly based with both residential and non-residential construction also set to see strong growth. Unsurprisingly, there are significant concerns around the cost and availability of key building materials as well as the requisite skilled labor to meet these ambitious plans. The challenges around recruitment of white collar as well as skilled trades is very much to the fore as an issue for the industry.”

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