Canada’s construction sector posted stronger growth than the broader economy in the third quarter of 2025, according to a new economic report from the Canadian Construction Association.
The industry’s gross domestic product output rose 1.3 per cent in the third quarter, outpacing the all-industry average, the association said in the winter edition of its Construction Quarterly Economic Insights report.
Growth outpaces broader economy
The report points to continued momentum in construction activity heading into the end of 2025, while also flagging cost pressures and labour constraints that could weigh on the sector’s ability to sustain growth.
“The opportunities ahead for our industry are significant, but so are the risks,” said Rodrigue Gilbert, CCA’s president. “Investments from the federal government will drive growth, but rising costs and workforce constraints will continue to limit the industry’s ability to unlock its full potential and deliver on Canada’s ambitious construction agenda.”
The association said construction GDP growth in the third quarter positioned the sector for continued advancement relative to other parts of the economy, based on data analyzed in the report.
Rising construction costs
The report also highlights ongoing increases in construction input costs as 2025 draws to a close.
The Building Construction Price Index rose 4.2 per cent year over year in the third quarter, with increases driven primarily by metal fabrications, structural steel and plumbing. According to the report, London, Ont., and Quebec City were the Canadian jurisdictions most affected by rising construction costs during the period.
Cost pressures varied by building type. The report said the cost of factory construction increased 5.7 per cent year over year in the third quarter, while office building construction costs rose 3.2 per cent.
The association said these increases continue to shape the operating environment for construction firms, particularly as companies plan projects amid higher material prices and constrained labour availability.
Federal capital spending outlook
The report also examines federal fiscal measures affecting the construction sector.
CCA pointed to the 2025 federal budget, published in November 2025, which outlined $89.7 billion in net new measures over the next five years. Of that total, $32.5 billion was classified as capital investments.
The association said approximately $32 billion in new construction-related spending has been earmarked over the next five years, based on its review of the budget measures. The report does not provide further breakdowns of the spending but identifies the scale of planned capital investment as a key factor shaping the sector’s outlook.
CCA said federal investment is expected to support construction activity, even as companies face rising costs and workforce challenges.
Industry outlook
Looking back on the year, the association characterized 2025 as a strong period for the construction industry, while emphasizing the importance of maintaining momentum.
“2025 was a very strong year for our industry and we’re looking forward to building on that progress to build the Canada that Canadians deserve,” said Gilbert. “Together, we’ll keep building Canada.”
The winter edition of the Construction Quarterly Economic Insights report is the association’s latest assessment of construction sector performance and conditions. The next edition of the report is scheduled to be released in April 2026.
Mario Toneguzzi
Mario Toneguzzi is Managing Editor of Canada’s Entrepreneur. He has more than 40 years of experience as a daily newspaper writer, columnist, and editor. He was named in 2021 and 2024 as one of the top business journalists in the world by PR News. He was also named by RETHINK to its global list of Top Retail Experts 2024, 2025 and 2026.
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