Canada's construction and maintenance industry rebounded strongly in 2021 and is expected to continue growing through 2027 on the strength of strong near-term demand and sustained activity in several key sectors.

Construction investment rebounded strongly in 2021 as Canada's economy recovered from the effects of the COVID-19 pandemic. Total year-over-year construction investment increased by approximately 11 percent in 2021, as both the residential sector (+14 percent) and the non-residential sector (+8 percent) saw gains. Investment is projected to remain at or near current high levels through 2023 and before declining gradually over the remainder of the forecast period.

The rise in construction activity in 2021 lifted employment to approximately 1.1 million workers. That figure is a 7 percent increase over 2020 levels and a 1 percent rise over pre-pandemic figures recorded in 2019. The surge in construction activity in both the residential and non-residential sectors is expected to boost employment further to a peak in 2022 before diverging trends take hold thereafter. By 2027, employment is expected to expand by nearly 16,000 workers or about 1 percent above 2021 levels.

"The good news story is that construction has rebounded well from the effects of the COVID-19 pandemic, thanks to a strong housing market and public-sector infrastructure investments," says BuildForce Canada executive director Bill Ferreira. "The challenge before the industry, however, is how to manage its labor force. Retirements are expected to reach their highest levels over the next two years. About 156,000 workers, many of whom are from the baby-boom generation, are expected to exit the industry. This represents a significant loss of skills and experience – skills that take time to develop and that are not typically easily replaced by new workers entering the labor force."

Residential construction activity recorded significant increases in 2021, with housing starts increasing by 21 percent over 2020 levels. BuildForce Canada expects demands in most provinces to recede from this peak in 2022 or 2023. There appears to be some evidence that Canada is not keeping up with demand for new homes, though in the face of rising interest rates, declines are expected in the rate of new-home construction throughout the forecast period. This in turn should produce corresponding declines in overall employment; declines that are only partly offset by rising demand for renovation work. By the end of the forecast period, residential-sector employment is expected to have declined by 4 percent (-24,900 workers) from its 2021 starting point.

Non-residential demands are expected to remain strong over the forecast period, driven by increases in spending across the public and private sectors. The largest gains are expected over the near term, peaking in 2024. Employment by 2027 is expected to be 5 percent higher than 2021 - an increase of 26,300 workers.

Closing the skill gap in Canada's construction industry

The development of skilled tradespersons in the construction industry takes years, and often requires participation in a provincial apprenticeship program. Replacing retiring workers typically requires several years of pre-planning to avoid the creation of skills gaps. By 2027, overall hiring requirements in the industry are expected to be near 172,000 due to the retirement of approximately 156,000 workers (or 13 percent of the current labor force) and growth in worker demand of nearly 16,000.

Based on historical trends, Canada's construction industry is expected to draw an estimated 143,000 first-time entrants aged 30 and younger from the local population, leaving the industry with a possible retirement-recruitment gap of 13,000 workers. When coupled with demand growth, the industry may be short as many as 29,000 workers by 2027. Clearly, an ongoing commitment to apprenticeship development in both compulsory and non-compulsory trades will be necessary to ensure there are sufficient