Pomerleau Economic Radar Q2 2026

1. Activity: Encouraging Signs for Construction

Following a hesitant start to the year, construction GDP increased by 1.06% quarter over quarter, supported in particular by engineering construction and other construction activities. Investment in building construction also increased, driven primarily by the residential sector.

Building permits provide another encouraging signal for the Canadian construction industry. The value of non-residential building permits jumped 14.08% during the quarter, led by institutional and government projects. This increase will need to be monitored to determine whether it reflects a sustained trend or the impact of a small number of major projects. The recovery therefore remains uneven, with the outlook varying across construction segments.

2. Costs: More Targeted Pressures Remain

Non-residential construction prices increased 3.50% year over year in Q2 2026. Cost pressures continue to vary considerably by market: London and Quebec City stand out for their year-over-year increases, while markets in British Columbia recorded more moderate growth.

Construction materials are also following different trajectories. Several commodities declined during the quarter, while some metals remained significantly more expensive than a year earlier. Mechanical and electrical products recorded more limited increases. These differences reinforce the importance of assessing construction costs in Canada according to regional conditions, material categories and the specific requirements of each project.

3. Labour: A More Balanced Market, With Some Tightening

Canada's construction labour market is showing signs of stabilization, although employment remains slightly below its level from a year ago. In June, the construction unemployment rate stood at 6.0%, compared with 6.5% across all industries.

At the same time, the construction job vacancy rate increased from 2.9% in March to 3.2% in June, while the unemployed-to-job-vacancy ratio declined, pointing to some tightening over the three-month period. This reinforces an important consideration for project planning: a stabilizing labour market does not necessarily guarantee access to the resources required to deliver projects. Construction workforce planning therefore remains an important factor in successful project delivery.

4. Economic Environment: Uncertainty Remains Elevated

After reaching a peak in spring 2026, global supply chain pressures eased in the months that followed. They nevertheless remain above their historical average, reinforcing the need for continued vigilance when planning procurement and deliveries.

Trade and geopolitical tensions, along with energy market volatility, continue to affect project predictability. Their impacts can flow through to transportation and production costs, as well as to the price of many materials used in construction. Even in a more stable environment, changes in tariffs and strategic inputs remain important indicators to monitor when anticipating potential project delivery constraints.