Ontario Construction News staff writer
The Ontario construction sector is facing a complex economic picture in early 2025, marked by a significant jump in unemployment alongside a welcome, though incomplete, cooling of building cost inflation, according to a report released Tuesday, 2025, by the Ontario Construction Secretariat (OCS), representing unionized contractors and construction trade unions.
The report, which analyzes data from Ottawa, Toronto, and London, found that January saw the unemployment rate in the construction industry climb to 9.6%, a substantial increase from 6% in December. This surge is attributed to a combination of factors: a 0.7% year-over-year decrease in overall employment coupled with a robust 3.2% expansion of the construction labor force. While concerning, the current unemployment rate remains below the peak of 10.1% seen in January 2021 and is comparable to figures from January 2019. Interestingly, while overall employment contracted, women’s employment in the sector saw a modest 0.5% year-over-year increase, while men’s employment decreased by 0.9%.
On a more positive note, the Building Construction Price Index (BCPI) for these three key cities saw a considerable reduction in inflation throughout 2024 compared to the double-digit increases of the previous two years. This moderation offers some relief to developers and builders.
However, the report cautions that inflation in the ICI (Industrial, Commercial, and Institutional) building sector still significantly outpaces overall headline inflation, which stood at 1.7% year-over-year in December.
Furthermore, there are signs that inflationary pressures may be reheating, particularly in Toronto. The fourth quarter of 2024 saw a re-acceleration of quarterly inflation across all sectors, rising from 0.6% to 0.9%. Toronto experienced a more pronounced increase, with average ICI inflation jumping from 0.5% to 1.1% quarter-over-quarter, compared to Ottawa’s increase from 0.6% to 0.8%. London, while new to the tracking data, showed a different trend with stalled or slightly lower quarterly increases, but still high annualized inflation.
The OCS report, citing Statistics Canada, points to persistent challenges such as skilled labor shortages, limited land availability, and evolving building code changes as key drivers of continued inflationary pressure within the construction sector. These factors suggest that while building cost inflation has moderated, it remains a significant concern for the industry, particularly in major urban centers like Toronto. The fluctuating employment figures also highlight the dynamic and sometimes unpredictable nature of the current economic climate for the construction industry across Ontario.