February 22 2024: Investment up in 2023; Inflation slows modestly on annual basis

February 22, 2024

Total ICI building construction investment cooled down by a smidge at -0.3% from November to December due to a -2.5% contraction in the commercial sector. Industrial and institutional sector investment saw marginal gains. Headline CPI dropped below 3%. The IPPI showed a mixed picture with cement, glass, and other non-metallic products price inflation posting a significant drop, while the decline in lumber and other wood product prices stalled. The Building Construction Price Index posted a small slowdown for Toronto.

Monthly Changes

Total ICI investment in building construction decreased by 0.3% in December, from $2.63 billion – $2.62 billion. Commercial building investment was -2.5% month-to-month (m/m) and decreased from $1.36 billion to $1.32 billion. Industrial investment grew 1.6% ($631.6 million – $641.6 million), and institutional sector investment increased 2.6%, from $635.1 million to $651.7 million. Commercial sector investment has been on a gradual decline since July, while industrial sector investment continues to post record highs (in current unadjusted dollars). Institutional sector building investment is the highest since 2012 and continues to increase towards record levels.


Despite the small dip in the month-to-month investment, total investment in ICI building construction in 2023 was up 12.5% compared to 2022, with the industrial sector experiencing the largest percentage change (28.3%). The strongest gains were from the first half of the year, as Q1 2023 was up 13.7% compared to Q1 2022, and Q2 2023 was up 15.9% from Q2 2022. However, Q3 and Q4 gains were also noteworthy, at 11.5% and 9.5% respectively.

As expected, Toronto posted the highest investment numbers, with the largest gains coming from July 2023 ($1.37 billion). When excluding Toronto, the Ottawa-Gatineau (Ontario Part) CMA had the highest commercial ($831.4 million) and institutional ($572.5 million) building investment in 2023. The institutional sector investment could be attributed to both hospital construction and the parliament centre block reconstruction. Windsor posted the highest industrial sector investment (excl. Toronto), at $720.2 million; a monumental 257% increase in building construction investment compared to 2022. This was likely due to the construction of the EV battery plant.

Ontario’s headline inflation dropped from 3.4% in December to 2.7% in January. This was mainly due to a combination of lower goods inflation, which dropped from 2.5% to 1.4%, and -4% inflation in energy. Core inflation ebbed slightly, from 3.5% to 3.2% as services price inflation fell from 4.1% to 3.8%.

Note: Inflation excluding food and energy, or “core” inflation is often of interest since food and energy prices tend to be volatile and may not represent average underlying prices trends.

The Building Construction Price Index was down modestly when looking at the Toronto CMA, from 7.5% in Q3 2023 to 5.5% in Q4 2023 (annual change from the same quarters in 2022). Most notably, inflation for the industrial component dropped from 7.8% to 5.5%. The Ottawa region saw less prominent decreases, slowing from 8.2% y/y inflation to 7.8% for non-residential construction overall. Statistics Canada noted that some wage pressure remained as labour supply issues persisted. However, it was also noted that the construction job vacancy rate in November 2023 was 4.5%, which was the lowest since February 2021 and could help further ease labour costs.

Decreasing Prices

Energy and petroleum product prices continued their downward trend in January, marking the 11th straight month of negative year-over-year (y/y) inflation (-15.7% y/y; -14.2% in December 2023). Fabricated metal products and construction materials were also down for the 11th month in a row, posting yet another marginally negative change (-2.1% y/y; -3.1% in December 2023).

Slowing Prices
Cement, glass, and other non-metallic mineral products experienced the largest drop in y/y inflation in over 2 years, down from 11.4% to 6% in January. Packaging material and containers also fell sharply, from 5.9% to 1.5%.

Accelerating Prices
Surprisingly, lumber and other wood products inflation was positive for the first time in 15 months. However, it was up only 0.2% y/y. The reason for this reversal is likely due to the already large drop posted in Jan 2023 (-30.7% y/y).



Ali Ahmad
Research Analyst

Ontario Construction Secretariat (OCS)
180 Attwell Drive, Suite 360, Toronto, ON M9W 6A9
P 416.620.5210 ext. 222