By Darren Cash and Douglas McNeil
Special to Ontario Construction News
Despite the current headwinds, Ontario’s rebound looks promising. Continued investment in infrastructure will serve as an economic stimulus.
While a strong rebound was observed in Ontario over Q3, the size of the recovery was less than most had anticipated. However, pent up demand significantly boosted consumer spending over the quarter and the value of building permits issued for single family homes in Ontario increased by 18 per cent in September. This significant growth in residential construction continues to place pressure on an already thin labour pool in a sector that continues to deal with increasing lumber prices and insurance rates. The total value of non-residential permits increased by $805 million in September which represents over half of the value in this sector.
Growth is expected to be more modest over Q4 2020 and Q1 2021 with the resurgence of the COVID-19 virus and community transmission across Ontario. While the extension of the Canada Emergency Wage Subsidy (CEWS) and the Canada Emergency Rent Subsidy (CERS) will undoubtedly assist millions of Ontarians during this period.
Despite this, the Provincial Government is continuing at pace with infrastructure investment. By 2041, Ontario’s population is forecast to have grown by approximately 30 percent and so, despite the current headwinds, the Government is continuing with its investment initiative in schools, hospitals, public transit, roads, and bridges. The acceleration of certain aspects of this work is forecast to offset the majority of the decline in private investment during the upcoming turbulent months. Overall, this is good news for the industry. The turbulent nature of decision making over this time is likely to lead to continued volatility in pricing in the Ontario market.
Contractors continue to face upward pressures owing to the impact of COVID-19 on site. In addition, the acceleration of infrastructure and federal real estate investment will continue to challenge the shortage of skilled labour within the Ontario market, indicating certain aspects of the supply chain remain at or near capacity.
Darren Cash and Douglas McNeil are directors with Turner & Townsend, an independent professional services company specializing in program management, project management, cost and commercial management, and consulting across the real estate, infrastructure, and natural resources sectors.