Market Snapshot: Canada

Market Snapshot: Canada

Weekly market intelligence for AE and environmental industry leaders.

Canada’s economy is showing signs of finally emerging from a wintertime hibernation. After teetering on the brink of a recession, growth is returning and construction activity is trending upwards, with one notable—and enormous—exception.

Battered by inflation, a global energy price shock, and American tariffs and trade uncertainty, Canada’s real GDP contracted 1.0% in the final quarter of 2025 and another 0.1% in the first quarter of 2026. Momentum returned, however, in April, when the economy posted its strongest growth in nine months, prompting forecasts that Canada has dodged a recession. 

The Wall Street Journal reported last week that “economists estimate April’s growth and the outlook for May put Canada’s economy on a path toward annualized growth of more than 2%.” TD Economics projects real GDP increases of 1.3% in 2026 and 1.8% in 2027 after a listless 0.7% rise in 2025.

Mirroring the broader economy, Canada’s construction industry endured a frigid start to the year. April brought about a thaw, however, as Statistics Canada noted that construction activity rose for the first time in five months.

ConstructConnect reports that total construction starts through April dropped nearly 40% compared to the first four months of 2025 due to “sluggish nonresidential and civil activity.” It projects that total starts will finish the year down 16.3%. Those numbers, though, are largely weighed down by Ontario, which accounts for 40% of the Canadian construction market. Excluding the country’s most populous province, ConstructConnect expects construction starts to rise this year.

Growth is fastest in the country’s west. ConstructConnect forecasts 2026 construction starts to more than double in Saskatchewan, boosted by a large provincial capital program and commercial investment. It also projects construction starts growth of 22.2% in Manitoba, 12.2% in British Columbia (driven by government investment in highway, energy, and heavy engineering projects), and 7.1% in Alberta where transportation, energy, and technology projects are driving growth.

While a weak residential market is dragging down Ontario’s construction activity, TD Economics reports a sizable provincial capital spending plan is offering a boost. In neighboring Quebec, ConstructConnect forecasts a 6.9% rise in construction starts this year with increases in medical, commercial, and industrial activity.

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