Canada’s construction sector staged a sharp recovery in 2021, expanding by 6.1 percent in real terms after contracting by 2 percent a year earlier, according to a newly released industry report now available from ResearchAndMarkets.com.
The rebound was driven largely by a surge in residential construction, which grew 13 percent last year, alongside a modest pickup in civil engineering activity. Industry analysts point to progress in COVID-19 vaccinations, rising household incomes, and a broader global economic recovery as key factors behind the turnaround.
Momentum carried into 2022, with the report projecting real-term growth of about 4 percent for the year. Strong building permit data has supported that outlook. Government figures show the total value of building permits rose 8.3 percent in 2021, led by a 9.1 percent increase in residential permits and a 6.8 percent rise in non-residential construction approvals.
Investment across multiple segments is expected to underpin activity in the near term, including housing, transportation infrastructure, and energy projects. The oil and gas sector, in particular, is set for renewed spending. Industry estimates released in January 2022 forecast a 22 percent jump in capital investment, bringing total spending to roughly CAD 32.8 billion.
Still, the report warns of mounting risks that could temper growth during the early years of the forecast period. Construction material costs climbed sharply in 2021, with residential building prices up more than 18 percent and non-residential prices nearly 7 percent higher. Ongoing labor shortages and rising interest rates could further strain project timelines and budgets.
Despite these headwinds, analysts say the sector’s medium-term outlook remains supported by sustained demand for housing, infrastructure renewal, and energy investment, positioning construction as a key contributor to Canada’s post-pandemic economic recovery through 2026.