Surging construction activity will continue to translate into surging profits for Canada’s construction sector this year, with profits reaching a high of $6 billion.
High energy prices are driving construction in the oil and gas sector. Meanwhile, strong retail sales are supporting the building of new stores, low vacancy rates are boosting industrial and office construction, and Canada’s aging population is leading to increased hospital and nursing home construction.
Even new home construction is proving surprisingly resilient, mainly because of the red-hot market in the West. Rising mortgage rates will result in weaker residential construction in the near term, but this will be offset by increased spending on renovations and repairs.
Profits will weaken in 2007 and 2008, as slowing demand growth combines with rising costs for labour and material. Although profits will improve again in the outlying years of the forecast, they will not return to their 2006 peak, reaching $5.4 billion by 2010.