The report also pointed to the potential for modest improvement in residential construction later in 2025
Canada’s construction industry managed to buck the broader economic downturn in the second quarter of 2025, growing by 0.24% even as the national economy contracted, according to the Canadian Construction Association’s (CCA) latest quarterly report.
The sector’s resilience has been attributed to ongoing federal infrastructure initiatives, but industry leaders cautioned that rising costs, labour shortages, and evolving trade policies are complicating project delivery.
“Canada’s construction industry continues to show remarkable resilience — but that is not without its challenges,” said Rodrigue Gilbert, CCA’s president.
“We’re seeing growth in construction activity, fueled by the federal government’s nation-building focus, but rising costs, workforce shortages, and trade uncertainty are making it harder for companies to plan, bid, and deliver projects that Canadians depend on."
Procurement and trade policies in flux
The CCA’s report flagged upcoming “Buy Canadian” procurement rules for federal projects, set to take effect in November, as a potential double-edged sword.
While intended to boost domestic suppliers, the association warned that these changes could disrupt project timelines and increase costs if not implemented with input from the construction sector and related industries.
“Building strong communities, trade corridors, and critical infrastructure remains a national priority and a priority for our industry, but protectionism adds friction to that mission,” Gilbert said.
“We need coordinated trade, procurement, and investment policies that make it easier to build, not harder.”
Housing outlook
The report also pointed to the potential for modest improvement in residential construction later in 2025, citing anticipated Bank of Canada rate cuts and the federal Build Canada Homes initiative.
The Bank of Canada trimmed its key overnight rate to 2.25% on Wednesday, marking its second consecutive cut and the lowest level since July 2022. But governor Tiff Macklem made clear at a press conference that further rate reductions are unlikely unless the economic outlook shifts dramatically.
Meanwhile,
CCA analysts noted that weaker pre-sales and pronounced regional disparities, particularly in Ontario and British Columbia, could temper any rebound, making the path to sustained recovery uneven.
Canada’s new home construction rebounded in September, with housing starts rising 14% from the previous month—a pace that surprised many economists and signaled ongoing resilience in the face of challenging market conditions.
Canada Mortgage and Housing Corporation (CMHC) reported a seasonally adjusted annualized rate (SAAR) of 279,234 units, up from a revised 244,543 in August. Economists had expected a more modest increase to 255,000 units.
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