Construction (NAICS 23): Ontario, 2024-2026
HIGHLIGHTS
- There were 596,000 people employed in the Ontario construction industry, comprising 7.5% of Ontario‘s total workforce in 2023.
- Employment in the construction industry increased by 1.4% in 2023.
- Employment is expected to grow slightly over the 2024-2026 forecast period, supported by improving residential and non-residential building activity across the province.
- Investments in infrastructure and population growth will be key drivers of the construction industry, and there is an increased need to recruit skilled trade workers to meet industry demands.
ABOUT THE SECTOR
Composition and importance of the sector
The construction sector is comprised of three major subsectors - construction of buildings, heavy and civil engineering construction, and trade contracting – with the last being the largest by employment.
Firms in construction of buildings engage in new construction, undertake additions, or maintenance and repairs; heavy and civil engineering provide specialized services for construction projects; and specialty trade contractors generally perform masonry, painting, electrical work and other trades functions.
In 2023, the construction sector employed 596,000 people in Ontario, approximately 7.5% of the province‘s workforce.
The construction industry contributed $59.1 billion (6.8%) to Ontario‘s Gross Domestic Product (GDP) in 2023. Compared to the previous year, construction GDP in Ontario fell by $1.2 billion (-2.0%).
Graph 1. Employment Share by Subsector
Source: Statistics Canada, Labour Force Survey, Custom Table
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Geographical distribution of employment
Ontario‘s construction industry is concentrated in the Toronto economic region (ER), which accounted for 40.5% of total provincial construction employment.
The industry is over-represented in the Stratford-Bruce Peninsula and Kitchener-Waterloo-Barrie ERs – where the construction industry made up 12.1% and 9.5% of all employment in the respective region, compared to 7.5% for Ontario as a whole. The Stratford-Bruce Peninsula is home to one of the largest infrastructure investment projects in Ontario history at Bruce Nuclear Generating Station, which has led to a large boom in spin-off construction jobs.
Table 1. Employment by Economic Region
Source: Statistics Canada, Labour Force Survey, Custom Table
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WORKFORCE
Workforce characteristics
- Males accounted for 87.0% of Ontario‘s construction workforce in 2023, compared to 52.6% for all industries.
- Self-employment was more common in this industry at 26.7% in 2023, compared to 13.6% for all industries.
- The average hourly wage in construction was $36.92 in 2023, above the provincial average of $29.18.
- About 15.3% of those employed in the sector possess a university degree, lower than the average across all sectors in Ontario (39.3%).
Table 2. Top 5 Occupations
Source: Statistics Canada, Labour Force Survey, Custom Table
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RECENT HISTORY
Residential construction: In 2020 and 2021, the provincial housing market saw strong building activity; however, elevated interest rates caused residential construction investment and residential building permits to soften in 2022, a trend that has continued into 2023. Developers have faced issues during this period such as rising costs of borrowing, tight labour supply, and material shortages.
Correspondingly, housing starts slowed down, falling by 7.1% in Ontario in 2023, following a decrease of 3.5% in 2022. Comparatively, these decreases were preceded by increases in housing starts of 17.9% in 2020 and 22.5% in 2021. Home renovations also saw a decrease of 4.5% in 2023 after years of consecutive gains.
These declines are likely to persist through 2024, even though construction of rental and affordable housing unit projects were supported by newly introduced plans to eliminate GST and HST taxes on new rental housing built specifically for renters. The provincial government also introduced legislation to streamline certain third-party appeals to the Ontario Land Tribunal to help communities get quicker planning approvals for housing projects, and launched the Building Faster Fund, a three-year, $1.2 billion program that provides new funding based on performance against provincial housing targets.
Non-residential construction: In contrast to residential construction, non-residential building permit values increased in 2023 by 4.9%, following gains of 1.8% in 2022. Investment in non-residential building construction also grew in 2023 by 2.0%, led by a 21.1% growth in industrial construction investment, after a decrease of 4.1% in 2022.
Infrastructure investments continued to be at the forefront of non-residential building activity, with large investments in manufacturing plants (such as NextStar in Windsor, Honda in Alliston, Volkswagen in St. Thomas, and Asahi Kasei in Port Colborne), power plants, schools, transit, highways, and in utilities.
Graph 2. Employment, GDP, Building Permits, and Housing Starts for Construction in Ontario
Sources: Statistics Canada, Custom Tables
*Data are expressed as index where year 2013 = 100%
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EMPLOYMENT OUTLOOKS
Employment in Ontario‘s construction industry is expected to see slight growth over the 2024-2026 forecast period.
In Ontario, moderate growth is expected for residential construction. The rising cost of housing and rent in Ontario has contributed to calls for expanding the housing stock across the province. In addition, increasing immigration targets continue to provide rationale for greater residential construction in Ontario. Housing starts are expected to decline in 2024 but are projected to increase in 2025, and investments in the residential sector are forecasted to decline in 2024 but to grow from 2025 to 2028. Overall, consistent demand for residential housing will support growth in the construction sector.
The non-residential construction sector will likely continue its trajectory of growth, supported by investments in infrastructure and industrial construction. The non-residential sector is projected to grow and peak by 2027 and sustain a strong growth trend until 2029.
Interest rate decisions by the Bank of Canada will influence both residential and non-residential construction activity. After four years of interest rate holds and hikes, the Bank of Canada lowered the benchmark interest rate for the first time in June 2024, followed by another decrease in July 2024. Lower borrowing costs for builders, as well as improved affordability for homebuyers, should encourage new construction projects and housing market activity.
However, a key concern for the construction industry moving forward is the aging workforce. To help offset retirements from the baby boomer generation and meet demands, there has been a focus on recruitment initiatives to promote skilled trade occupations. For example, a number of apprenticeship grants and programs exist under the Government of Canada‘s Canadian Apprenticeship Strategy, including the Apprenticeship Service Program, the Union Training and Innovation Program (UTIP) program, the Skilled Trades Awareness and Readiness Program, and the Women in the Skilled Trades Initiative. Provincially, Ontario‘s Skills Development Fund supports projects that address labour shortages in Ontario‘s economy, including training and capital projects in the construction sector.
Table 3. Employment Change in Construction: July 2019 vs. July 2024
Source: Statistics Canada, Labour Force Survey, Custom Table
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Key trends affecting the outlook of the construction sector
- Large infrastructure investments coupled with major industrial construction projects will drive growth in the province‘s non-residential construction.
- Falling interest rates that may encourage new sales and construction projects.
- Higher levels of immigration combined with provincial legislation to encourage residential construction.
FOR FURTHER INFORMATION
Note: In preparing this document, the authors have taken care to provide clients with labour market information that is timely and accurate at the time of publication. Since labour market conditions are dynamic, some of the information presented here may have changed since this document was published. Users are encouraged to also refer to other sources for additional information on the local economy and labour market. Information contained in this document does not necessarily reflect official policies of Employment and Social Development Canada.
Prepared by: Labour Market and Socio-economic Information Directorate, Service Canada, Ontario Region
For further information, please contact LMSID at: Contact: Labour Market Information - Canada.ca (services.gc.ca)
APPENDIX
Table A1. Geographical Distribution of the Sector
Source: Statistics Canada, Labour Force Survey, Custom Table
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Table A2. Characteristics of Employed Persons
Source: Statistics Canada, Labour Force Survey, Custom Table
*Average annual growth rate for last ten years available data
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| Construction | All Sectors | |||||
|---|---|---|---|---|---|---|
| Employment, 2023 | Share of Total (%) | AAGR (%) * | Share of Total (%) | AAGR (%) * | ||
| Employment | 596,000 | 100.0% | 2.4% | 100.0% | 1.6% | |
| Male | 518,600 | 87.0% | 2.2% | 52.6% | 1.7% | |
| Female | 77,400 | 13.0% | 4.5% | 47.4% | 1.4% | |
| 15-24 years old | 66,500 | 11.2% | 1.7% | 13.2% | 1.3% | |
| 25-54 years old | 401,100 | 67.3% | 1.7% | 65.0% | 1.2% | |
| 55 years and older | 128,400 | 21.5% | 6.6% | 21.8% | 3.0% | |
| Worked full-time | 554,900 | 93.1% | 2.6% | 82.7% | 1.8% | |
| Worked part-time | 41,200 | 6.9% | 1.8% | 17.3% | 0.3% | |
| Self-employed | 159,100 | 26.7% | 0.8% | 13.6% | 0.4% | |
| Employees | 437,000 | 73.3% | 3.2% | 86.4% | 1.8% | |
| Permanent job | 398,100 | 66.8% | 4.3% | 76.6% | 1.9% | |
| Temporary job | 38,900 | 6.5% | -3.3% | 9.7% | 0.9% | |
| Less than high school | 56,900 | 9.5% | -1.7% | 6.1% | -2.1% | |
| High school graduate | 183,100 | 30.7% | 1.9% | 22.3% | -0.4% | |
| Postsecondary cert. or diploma | 265,100 | 44.5% | 2.9% | 32.3% | 1.3% | |
| University degree | 90,900 | 15.3% | 7.8% | 39.3% | 4.1% | |