ICI expected to hold steady in face of recession
March 3, 2023
By
Adam Freill
BMO Capital Markets’ Robert Kavcic outlines economic expectations for 2023. (Photo by On-Site Staff)
“There are clearly some risks out there,” stated Robert Kavcic. “It is not entirely certain where this economy is going to evolve.”
Speaking at the Ontario Construction Secretariat’s (OCS) 2023 State of the Industry and Outlook Conference in Mississauga, Ont., on March 2, Kavcic, a senior economist and director with BMO Capital Markets, explained that the current economic environment doesn’t match to prior slowdowns as job vacancies and available workers align at a rate of almost one-to-one, and many segments, other than residential construction, may see growth this year. That said, he explained that inflation is the biggest factor in whether Canada enters recession, and for how long.
“There is a 65 per cent chance that the Canadian economy falls into recession in the coming year,” he said, adding that the most likely scenario will be an economic slowdown that is short-lived.
He is calling for a modest recession this year with a return to growth in 2024, although he added, “Ontario will experience a deeper recession than the rest of Canada due to residential construction.” That segment is going through a post-pandemic housing price correction that is being felt particularly hard in Canada’s most populated province.
Other construction sectors are expected to fare much better, however. “Non-residential spending looks quite firm,” he said, as governments appear to be focused on infrastructure and institutional projects.
That appears to align with the recently released OCS 2023 Contractor Survey, which polls members of the Industrial, Commercial and Institutional (ICI) building sector. The organization’s director of research, Katherine Jacobs, explained that more than 80 per cent of ICI contractors in Ontario have a positive outlook for the coming year, adding that the industry is working to navigate the supply, pricing and labour challenges of the past few years as it manages more than $160 billion of projects in its pipeline.
“There’s a huge pipeline of projects in Ontario right now,” she said.
Next year’s conference is scheduled for March 7 at the International Centre in Mississauga.
