Construction industry trends: Ontario 2016-2018


  • Residential building construction to observe possible slower growth after 2017
  • Significant infrastructure funding commitments by federal and provincial governments will lead to higher activity among heavy and civil engineering projects and the institutional building sector
  • Commercial sector continues to remain strong among non-residential building construction in the medium-term
  • Employment in the provincial construction industry is expected to grow by 1.3% per year from 2016 to 2018

Looking forward to the medium-term horizon, the Ontario construction industry, which has been propelled by strong growth in residential building construction since the 2008/09 recession, will shift gears as large-scale heavy engineering infrastructure projects, and commercial and institutional non-residential building construction, will carry the momentum for employment and investment in the industry over the forecast period of 2016 to 2018.

A generational shift within the Ontario construction industry

Ontario is expected to lose as many as 86,000 workers, or about 18% of the current employment level, this decade to retirement.This will put ever-growing pressure on the provincial construction industry to both develop and bring in an ample supply of highly skilled workers, particularly into the non-residential workforce, through apprenticeships, immigration and labor mobility within Canada. Net migration from other provinces and immigration from outside Canada will prove to be an important source of new entries into the industry and expansion in the labor supply over coming years.

Residential building construction to soften its rapid growth

The rising levels of both household debt-to-income and house price-to-income ratios in Ontario, with possible implications for a future slowdown in various real estate markets due to affordability issues is worrisome. Furthermore, the expected rise in the interest rate within the forecast period may increase the cost of mortgages, which could further exacerbate affordability or debt issues. These factors contribute to a cautious but positive outlook for the residential sector in the province over 2017 to 2019.

Non-residential ICI (industrial, commercial, institutional) building construction carries momentum

Industrial construction

The industrial construction sub-sector is comprised of establishments primarily engaged in the construction of industrial buildings, with the exception of warehouses which are considered part of the commercial sector. Investment into construction in the industrial sector has gradually recovered to its levels from a decade ago, after a large decrease during the 2008/09 recession.

Commercial and institutional construction

The commercial and institutional sub-sector is comprised of establishments primarily engaged in the construction of buildings, such as hotels, shopping centers, warehouses, office buildings and airports, while the institutional sector includes buildings such as schools, hospitals and libraries.

The growth among large-scale retailers in busy retail hubs such as downtown Toronto has been one of the main factors pushing growth in the sector over the past decade, with Toronto expected to have the highest amount of commercial construction activity in Canada, and downtown Toronto having the lowest office vacancy rate in all of North America. The commercial sector is expected to experience steady employment growth, with strong confidence in the sector from contractors across Ontario. 

Heavy and civil engineering construction constitutes Ontario’s largest projects

The heavy and civil engineering construction sub-sector includes establishments primarily engaged in building highways, streets and bridges, as well as utility systems (e.g., water, sewer, and power line and related structures). Since growth is often tied to large-scale private and public investment in provincial infrastructure, the sector depends on the fiscal policies of various governments and favorable conditions for investment in Ontario.

The federal and provincial governments have also made significant pledges towards improving water and wastewater systems and green infrastructure projects, all of which contributes to an overall positive employment outlook for the sector.

Sector Outlook, 2016–2018

Employment in the Ontario construction industry is expected to grow by an annual average of 1.3% from 2016 to 2018. There will be an increased demand for apprentices, supported by changing regulations and an anticipated turnover in labor supply due to looming retirements among the baby boomer generation.

Sub-provincial trends

In the economic region of Toronto, home prices remain elevated and demand is strong; however, there are signs of slowing housing starts over the forecast period. Construction in the commercial sector is a major driver in Toronto due to the concentration of large retailers and office buildings for which demand remains high.

New housing starts and MLS re-sales in the Kitchener-Waterloo-Barrie and Hamilton-Niagara Peninsula economic regions are expected to grow, albeit at a slow pace, over the projection period

Demand for housing in LondonWindsor-Sarnia and Stratford-Bruce Peninsula is also expected to remain steady over the forecast period.

Construction activity has been somewhat weak and is expected to continue along this trend, due to weaker economic conditions and less housing demand, in Kingston-Pembroke and Muskoka-Kawarthas.

Ottawa may see some further gains in construction employment after a period of employment growth, with housing starts trending upward over the forecast period and large infrastructure projects in progress.

The Northwest and Northeast regions of Ontario hold promise for the construction industry, with a significant investment in highways announced in recent years.

Demand in the residential sector is expected to remain steady, with forecasted housing starts trending flat in Thunder Bay and Sudbury over 2016 to 2018.

On the non-residential side, Northern Ontario will also see significant infrastructure improvements.

Source: Jobs Bank




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