Ontario’s industrial, commercial and institutional construction contractors report strong workloads heading into 2026, but rising costs, financing constraints and labor pressures continue to cloud the market outlook, according to the Ontario Construction Secretariat’s annual Contractor Survey.

Two-thirds of contractors surveyed said they were operating at or above capacity in 2025, and a similar share expects to maintain that level of activity in 2026. However, sentiment about the broader provincial construction market is mixed. Nearly half of respondents anticipate a stable market (35 percent) or growth (14 percent), while 46 percent expect overall activity to decline.

The findings were released during the OCS 26th Annual State of the Industry & Outlook Conference in Toronto.

Project postponements remain widespread across the sector. The survey found that 58 percent of contractors experienced at least one project cancellation or delay.

Respondents identified escalating material costs (66 percent) and lack of financing (59 percent) as the primary factors driving project deferments. Trade-related uncertainty (45 percent) and high interest rates (45 percent) were also cited as significant contributors.

For contractors working in interior finishes, delayed project starts directly affect drywall, plaster and ceiling installation schedules, compressing timelines once projects move forward and increasing coordination risks across trades.

Supply Chain Conditions Stabilizing

While cost escalation remains a concern, supply chain reliability has improved. Only one-third of contractors reported supply chain disruptions in the past year, a significant drop from 58 percent in 2024.

More stable supply conditions can reduce scheduling uncertainty for interior finishing contractors who rely on consistent deliveries of gypsum board, framing components, insulation and ceiling systems to maintain productivity during the finishing phase.

Contractors More Optimistic About Their Own Firms

Despite uncertainty about the broader market, many contractors remain positive about their own business outlook. Roughly one-third of firms in the Southwest (36 percent), Central (32 percent), East (34 percent) and Greater Toronto Area (35 percent) regions expect growth in 2026.

The outlook is more cautious in Northern Ontario, where only 20 percent of contractors anticipate growth.

Regional differences in project pipelines can influence demand for interior finishing trades, particularly in institutional and large commercial builds where drywall, plaster and suspended ceiling assemblies represent a substantial portion of late-stage construction work.

Labor shortages continue to affect the sector, with one in five contractors identifying workforce availability as their top challenge. While that figure has declined compared with previous years, industry leaders say maintaining a skilled workforce remains critical.

The issue is particularly acute in smaller markets, where a single major project can significantly affect labor availability.

Apprenticeship Hiring Expands

Contractors are increasing investment in workforce development. According to the survey, 70 percent of contractors now employ apprentices, up from 58 percent in 2024 and 64 percent in 2025.

Among unionized contractors, the share employing apprentices rises to 82 percent.

The OCS Contractor Survey was conducted by Ipsos through phone interviews with 400 union and non-union contractors in Ontario’s ICI construction sector between Dec. 23, 2025 and Jan. 26, 2026. The survey has a margin of error of ±4.9 percentage points, 19 times out of 20.