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The Construction Market Insights report provides an overview of the construction industry in the United States and Canada, including macroeconomics, construction industry overview, commodity movements and supply chain outlook.
Key Takeaways:
Macroeconomic Overview
The US economy is set for solid growth in 2024 but is projected to slow down in 2025. In contrast, Canada's growth is expected to pick up pace in 2025, following a slower start in 2024. By 2025, Canada’s GDP growth is forecasted to rise to 2.4%, fueled by infrastructure projects and rising export demand.
Inflation and interest rates
Inflation in both the US and Canada is expected to decrease steadily, reaching target levels by 2025. This trend is driven by tighter monetary policies in the first half of 2024, improved supply chains, stable energy prices, and moderated wage growth.
This is being reflected in interest rates, with the US Federal Reserve making its first cut in over four years in September and the Bank of Canada also lowering the cost of borrowing over the summer. Both economies anticipate further rate cuts.
Construction industry overview
Increased spending in non-residential sectors like data centers, manufacturing, infrastructure, and energy and utilities are driving growth in the US construction industry. The data center sector has proved particularly dynamic, with construction spending increasing by 58% in the year leading up to September 2024.
Canada's construction industry is expected to struggle in 2024, with a projected decline of 3.1%, mainly due to ongoing weaknesses in the residential sector. From 2025 onwards, the industry is expected to rebound at an annual average growth rate of 2.2%, fueled by substantial government investment in transport, renewable energy, healthcare and education. The residential market is also expected to show signs of recovery.
Labor remains a significant cost factor due to the shortage of skilled workers. While decreased construction activity in some sectors has alleviated demand temporarily, a potential rise in activity due to falling interest rates could push labor costs back up.
Demand for MEP equipment from mission-critical sectors continues to be high and is expected to increase further due to AI-driven project needs, leading to capacity pressures. While 2024 tested the resilience of supply chains, proactive planning and supplier investments provide hope for gradual improvement in 2025. Early engagement with vendors and strategic forecasting will remain vital for navigating ongoing complexities.
Construction inflation in both the US and Canada has eased compared to last year. During 2025, the new US administration may introduce changes related to immigration policies and tariffs. This will require close monitoring.
Commodities
In recent times, prices for most commodities have stabilized, as supply and demand have balanced out.
While energy-intensive commodity prices remain mostly unchanged, there may be increases in products such as low-carbon concrete due to growing demand to meet decarbonization goals, which could strain an underdeveloped supply chain.
Prices for flat and stainless steel have dropped significantly, although there is still some volatility in the stainless steel market. Meanwhile, steel rebar prices remain high in the US.
The fluctuating prices of metals remain a concern. Copper and aluminum prices are higher than they were in 2023 due to issues with supply, raw material availability, and import costs.
Download the full report to access these insights and analysis of the construction market for the United States and Canada.
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