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Construction is one of Canada's largest industries, providing both infrastructure and employment. The industry includes residential and non-residential components.
From 2005 to 2009, construction contributed from 5.8% to 6.1% each year to Canada's gross domestic product (GDP). In 2009, its contribution was $69.1 billion, or 5.8%, down from 6.1% in 2008.
During economic downturns, building and construction projects are usually hit hard, and 2009 was no exception. Key indicators, including investment, building permits, capital expenditures for construction and housing starts, either held steady or dropped.
Value of building permits down
Contractors took out $61.0 billion in building permits in 2009, down 13.3% from 2008. Of all provinces, Prince Edward Island, Alberta and British Columbia experienced the greatest percentage decreases in the value of building permits, dropping 17.7%, 14.2% and 27.9%, respectively.
Investment in non-residental building construction in all census metropolitan areas totalled $32.5 billion in 2009, up 0.5% from $32.3 billion in 2008.
In 2009, investors spent $24.8 billion on commercial projects, down 6.0% from 2008, and $4.7 billion on industrial projects, down 14.6% from 2008. This is consistent with the drop in the value of building permits during the economic downturn. There was, however, one positive investment trend in the industry: from 2008 to 2009, spending on institutional projects continued to increase, rising 20.0%, from $11.0 billion to $13.2 billion.
From 2008 to 2009, housing starts across Canada fell 29.4%, while capital expenditures for construction fell 10.1%. Mining and oil and gas extraction declined 32.0%, retail trade fell 30.3% while manufacturing declined 30.9%. These were were among the sectors experiencing the largest drops in capital expenditures for construction.
Average weekly earnings in the construction industry rose by 3.5% in 2009, continuing the trend of slower annual growth for the past several years (6.5% in 2007 and 5.5% in 2008). This was still higher than the 1.6% increase in average weekly earnings across all Canadian industries.
Average weekly hours worked in the construction industry fell 1.4% to 36.5 hours, slightly more than the 1.0% drop to 30.1 hours for all industries.
Employment for all industries declined 1.6% in 2009, while the unemployment rate rose to 8.3%. The construction industry, along with manufacturing, experienced the largest employment declines of all industries, falling by 71,000 (5.7%) while the unemployment rate rose to 10.9%.
These industries also experienced the largest employment declines over the first 12 months of the previous two economic downturns (1981 and 1990).
Falling prices for new housing and a flat resale market in the early part of the year gave way to rising prices later in the year. The average price for new housing in 2009 was 2.3% below the 2008 average. New housing prices as of December 2009 were 1.7% below their peak reached in September 2008.
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