Ontario contractors remain cautiously optimistic despite rising costs, labour gaps and uneven regional growth, says Ontario Construction Secretariat CEO.
At a time when project delays, cost escalation and economic uncertainty dominate industry conversations, Ontario’s construction sector is showing a surprising degree of resilience.
According to Brian Barron, CEO of the Ontario Construction Secretariat, contractors across the province remain confident about their own business outlook heading into 2026, even as broader market sentiment appears divided.
That confidence is borne out in the data. The Secretariat’s latest survey shows 49 per cent of contractors are optimistic about the industry’s outlook, compared to 46 per cent who are pessimistic, highlighting a sector that is far from uniform, but still leaning positive.
“The cancellations and pauses are not across the board – they’re really focused on the industrial side of things,” Barron explains. “But on the flip side, there’s been a lot of government investment… and that’s really keeping the ICI sector alive and well.”
Public investment holding the line
While headlines have focused on stalled manufacturing and industrial projects – many tied to global trade tensions and tariff uncertainty – the reality on the ground is more nuanced.
Barron points to strong activity in institutional and infrastructure segments, including schools, hospitals and transit, as the primary stabilizing force in Ontario’s ICI sector.
“Overall investment in ICI was up about six per cent from 2024 to 2025, and it looks like that will continue into 2026,” he says.
This sustained public spending is also reflected in what contractors themselves identify as key drivers of optimism. Survey respondents ranked project pipelines, broader economic conditions and government investment as the top factors supporting confidence.
For general contractors, that translates into a reliable base of work, even as private sector confidence fluctuates.
A market defined by delays and divergence
Despite that underlying strength, disruption remains widespread. According to the survey, 58 per cent of firms report experiencing project cancellations or postponements, highlighting the uneven nature of the current market.
Barron is quick to point out that these impacts are not evenly distributed.
“The pauses and cancellations are really concentrated in industrial sectors like manufacturing and automotive, where tariffs are having a significant impact,” he says.
Regionally, the divide is equally pronounced. In the Greater Toronto Area, 35 per cent of contractors expect more work in 2026, while 32 per cent anticipate less, representing a near split that reflects both opportunity and competition. In Central Ontario, optimism is stronger, with 32 per cent expecting growth versus 26 per cent expecting decline, while Southwestern Ontario leads the province with 36 per cent expecting more work.
By contrast, Northern Ontario lags, with only 20 per cent expecting growth and 23 per cent anticipating less work, highlighting structural challenges in that region.
Tariffs and material costs reshape the market
If public investment is propping up confidence, material cost escalation is pulling in the opposite direction.
Trade tensions, particularly around steel, are already having a measurable impact on project economics.
“Steel costs in some cases are up 40 per cent, which is a significant jump,” Barron says. “Even compared to seven years ago, it’s almost doubled.”
These pressures are reflected in contractor sentiment. Survey respondents cited high costs, financial strain and uncertainty as the top risks facing the industry in 2026.
For contractors, the implications are immediate and include tighter margins, more volatile bids and increased pressure to value-engineer projects
And while supply chain disruptions have eased – dropping from 58 per cent of firms reporting issues in 2024 to 34 per cent expected in 2026 – cost volatility remains a dominant concern.
“I’m not sure we’ve seen the maximum impact of tariffs just yet,” Barron cautions.
Adapting in a competitive environment
Despite these pressures, contractors continue to adapt, often driven by the realities of a fiercely competitive market.
“Construction is highly competitive, so contractors are still looking for the cheapest alternatives,” Barron explains.
That dynamic complicates efforts to localize supply chains, even as governments promote “buy Canadian” strategies.
At the same time, industry and policymakers are working to open new trade channels and diversify supply sources, particularly within Canada.
“There’s a lot of work being done right now to open up trade between provinces,” Barron says, explaining that it’s an effort that could improve long-term resilience.
Financing challenges: cost, not capital
While nearly 60 per cent of contractors cite lack of financing as a contributor to delays, Barron suggests the issue is less about access to capital and more about the rising cost of construction itself. However, with interest rates relatively stable, the real challenge lies in project viability.
“Construction costs have gone up due to material costs, which makes projects more expensive and forces owners to rethink their financing strategies,” he says.
This dynamic is also reflected in contractor concerns, with financial strain ranking among the top risks identified in the survey.
For GCs, this means navigating a market where projects are not necessarily cancelled outright, but are often delayed, downsized or re-scoped.
Demand remains strong, labour supply uncertain
Labour continues to be one of the industry’s most pressing challenges.
The survey shows one in four firms expect to increase their workforce in 2026, signalling continued demand for skilled labour. At the same time, 50 per cent of firms believe it will become harder to access skilled workers, highlighting a widening gap between demand and supply. Despite these numbers, however, Barron acknowledges that the industry has made progress in promoting careers in the trades.
“The industry has done a great job raising the profile of trades, from labourers to electricians and plumbers,” he says.
But structural issues persist.
“Canadians are not reproducing at a fast enough rate to sustain workforce growth,” Barron explains, pointing to demographic realities that are reshaping the labour market.
As a result, he suggests that immigration will play a critical role.
“We need to look at how to responsibly bring in people with the skills to do these jobs,” he adds.
Shifting labour dynamics across sectors
One short-term pressure release may come from the slowdown in residential construction, which could allow workers to transition into the ICI sector. However, Barron notes that this shift will only partially address the gap, particularly as large-scale infrastructure and institutional projects continue to ramp up.
Efforts to expand the workforce are also targeting underrepresented groups, including women, but long-term solutions will require a combination of training, recruitment and immigration policy alignment.
Regional realities: opportunity and constraint
The survey’s regional breakdown highlights a clear concentration of opportunity in Southern Ontario, driven by population density and infrastructure demand.
“There’s a higher concentration of population in the south, which requires more infrastructure and drives investment,” Barron explains.
Major projects in transit, healthcare and energy continue to anchor activity in these regions, creating strong pipelines for contractors.
In contrast, Northern Ontario faces structural barriers.
“The population just doesn’t warrant the same level of development, and geography plays a significant role,” he says, pointing to distance, logistics and cost as limiting factors.
Global pressures add another layer of risk
Beyond domestic challenges, global events are introducing new uncertainties into the construction landscape. Barron highlights the potential impact of geopolitical instability, particularly on energy prices.
“There will likely be further cost escalation,” he says. “Not necessarily directly in construction, but through things like energy costs.”
With fuel prices already rising, contractors can expect additional pressure on transportation costs, equipment operation and overall project budgets.
Measured optimism for 2026
Taken together, the data paints a picture of an industry that is balanced between opportunity and constraint.
- 59% of contractors expect competition levels to remain the same, suggesting a stable but crowded market
- 34% anticipate increased competition, while only 7% expect a decrease
- 58% report project disruptions, but pipelines remain active
Public investment continues to anchor growth
From Barron’s perspective, results of the survey reflect an interesting moment in time for the Canadian construction industry. And it seems, based on the sentiment of its contents, that it’s a moment that’s positioning general contractors across Ontario for growth if they can manage to stay agile by balancing cost pressures, workforce challenges and shifting regional opportunities while positioning for the steady stream of public infrastructure work that continues to define the market.