On-Site Magazine

Inflation and supply chain constraints taking toll

By Adam Freill   


Turner & Townsend report suggests opportunities exist in Canada’s construction sector, despite challenging market conditions.

PHOTO: Getty Images

Canada’s construction market is feeling the impact of inflation as prices of raw materials have increased significantly over the past 12 months, says Turner & Townsend’s fall 2022 Market Intelligence report.

According to the report, and based on Statistics Canada’s Raw Materials Price Index, the price of a number of common construction materials, including gravel and clay, have risen eight per cent since last summer. In addition to pricing issues, construction-related products continue to experience supply chain constraints, which not only impacts product availability, but also results in delays to project timelines.

Although the Canadian economy has largely been on an upward trajectory in the first half of the year, the ongoing global supply chain constraints have continued to disrupt international exports and the report authors warn that this will impact Canada’s growth over the next few quarters. They also say that these factors have impacted business confidence.

Historically, housing starts and building permits have provided real-time insight into future demand for housing and commercial buildings. Last quarter, the industry saw mixed results across the provinces, as the Bank of Canada started to tighten interest rates and the housing market cooled off. This quarter, both housing starts and building permits were up in all provinces, aside from building permits in Quebec, which experienced a moderate drop. This indicates there is still strong demand for both commercial and residential buildings across the country.


“Over the last quarter, companies have continued to invest in the Canadian market. There continues to be opportunities for growth particularly in infrastructure which has a healthy pipeline of projects country wide,” stated Gerard McCabe, managing director for Canada at Turner & Townsend. “Given recent stimulus and millions set aside in the 2022 federal budget, this is unlikely to change. Nonetheless, many existing or pre-budgeted projects are now likely over budget. Therefore, we are starting to see a more cautious approach reflected in day-to-day business decisions. In these challenging conditions, clients need to turn their focus to the creation of sustainable project plans with project goals, scope, and budgets.”

Citing Alberta and British Columbia for having the strongest performance of the provinces, with each posting double digit growth, the authors say the west is attracting investment and higher interprovincial migration, to Alberta in particular. As such, they expect to see demand for construction in the western provinces to continue on an upward trend for the remainder of 2022.




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