Canadian Occupational Projection System (COPS)

NAICS 5413; 5414; 5417

This industry comprises establishments that provide highly specialized business services in three different segments. Architectural, engineering and related services are by far the largest segment, accounting for 77% of production and 73% of employment in 2021. In comparison, specialized design services (which include interior, industrial and graphic design) accounted for only 4% of production, but 14% of employment, versus 19% and 13% respectively for scientific research and development services. The industry employed 424,900 workers in 2021, mostly concentrated in Ontario (40%), Quebec (23%), British Columbia (16%) and Alberta (13%). The workforce is mainly composed of men (64%) and characterized by a high level of education and a significant proportion of self-employed (24%). Key occupations (4-digit NOC) include:

• Graphic designers and illustrators (5241)
• Civil engineers (2131)
• Other professional engineers, n.e.c. (2148)
• Interior designers and interior decorators (5242)
• Drafting technologists and technicians (2253)
• Architects (2151)
• Mechanical engineers (2132)
• Electrical and electronics engineers (2133)
• Civil engineering technologists and technicians (2231)
• Engineering managers (0211)
• Construction inspectors (2264)
• Geoscientists and oceanographers (2113)
• Land survey technologists and technicians (2254)
• Architecture and science managers (0212)
• Chemical technologists and technicians (2211)
• Petroleum engineers (2145)
• Biologists and related scientists (2121)
• Theatre, exhibit and other creative designers (5243)
• Mechanical eng. technologists and technicians (2232)
• Architectural technologists and technicians (2251)
• Electrical and electronics engineering technologists and technicians (2241)
• Industrial engineering and manufacturing technologists and technicians (2233)
• Chemists (2112)
• Non-destructive testers and inspection technicians (2261)
• Land surveyors (2154)
• Biological technologists and technicians (2221)
• Geological and mineral technologists and technicians (2212)
• Industrial designers (2252)
• Chemical engineers (2134)
• Geological engineers (2144)
• Industrial and manufacturing engineers (2141)
• Physicists and astronomers (2111)
• Landscape architects (2152)

The industry strongly relies on the performance of the domestic economy and is largely driven by business investment and government expenditures, as well as research and development (R&D) activities. More precisely, the architectural and engineering segment, as well as the design segment are heavily tied to residential and non-residential investment, and the resulting impact on construction activity. Demand for engineering services also relies on business investment into machinery and equipment (M&E). In comparison, the R&D segment is closely tied to R&D spending from the private and public sectors for the development of new innovative products and technologies. Spending on R&D activities is generally driven by profitability in the private sector and by government expenditures in the public sector. Overall, the industry was a moderate performer for the Canadian economy over the past ten years, with output fluctuating significantly.

After being negatively affected by the deterioration of the economic conditions during the recession of 2008-2009, the output straightened in the following five years, as low mortgage rates and high energy prices stimulated new home construction and the development of major energy projects. However, the industry’s output fell back in 2015 and 2016, as non-residential investment and construction activity were severely affected by major investment cutbacks in oil and gas engineering structures due to the sharp decline in crude oil prices. Production recovered in 2017-2018 and continued to expand in 2019, supported by an increase in the construction of non-residential buildings, although growth was constrained by a small decline in residential activity. Real GDP in the industry contracted again in 2020 due to major lockdowns at the onset of the COVID-19 pandemic, but quickly recovered in 2021 in response to a substantial jump in new home construction. Besides large fluctuations in residential and non-residential investment, the declining trend in M&E investment and the stagnation of R&D spending are additional factors that contributed to restrain output growth in the industry. The resulting pace of growth in real GDP was rather modest, averaging 1.3% annually for the entire period 2012-2021. On the employment side, growth largely tracked the rate of output, albeit at a slightly faster pace of 1.5% per year, due to a small decline in productivity (-0.2% annually). Declining productivity reflects the fact that the sharp fall in non-residential investment following the oil price shock severely affected activity in the industry, lowering revenues and profitability, forcing many firms to reduce their capital expenditures, including investment in new technologies. The industry is also fairly labour intensive and relies on highly knowledgeable and skilled workers performing tasks that are less likely to be automated.

Over the projection period, output growth in the industry is expected to accelerate modestly relative to the period 2012-2021, primarily driven by faster growth in non-residential building investment and renewed growth in business investment related to engineering structures, machinery and equipment, as well as research and development activities. For example, the demand for architectural, engineering and design services is expected to be stimulated by the acceleration projected in the construction of industrial and commercial buildings in response to increased demand for energy efficient buildings, electric vehicle manufacturing plants and warehouse space due to the transition toward a green economy and the growing adoption of e-commerce. Following a steep decline in the past several years due to lower oil prices, business investment in engineering structures is expected to straighten, partly supported by major projects in the electric power (utilities), transportation and mining industries in response to growing demand for non-emitting sources of energy, public transit systems and critical minerals (used in the production of clean energy). The federal government’s infrastructure program launched in 2016 ($186 billion over 12 years) is also expected to continue to support the construction of public engineering structures and institutional buildings. In addition to transportation, public transit, green and rural infrastructures, this program also includes spending on social, cultural and recreational infrastructure. Furthermore, after holding back on investment in machinery and equipment for years, Canadian businesses are expected to replace or upgrade their existing capital stock in response to the development of new productivity-enhancing technologies, the acceleration anticipated in manufacturing activity, and demographic pressures on labour supply. Those factors are projected to result in a substantial rebound in M&E investment in Canada, boosting demand for engineering services. Similarly, renewed growth in business investment related to intellectual property, including R&D activities, is expected to boost demand for the industry’s expertise in various fields of scientific research and industrial design.

However, the demand for architectural services is expected to be contained by the small decline anticipated in residential investment (including new home construction) over the projection period, as a result of the surge in housing prices and higher mortgage rates in the short term, and the downward trend in household formation resulting from population aging in the longer term. That said, increasing urban population should help support demand for new residential buildings and mixed-use properties containing retail, office and residential components, which would require the expertise of architects to develop. On the trade side, there is some potential to increase exports of engineering and architectural services as demand for Canadian expertise is growing rapidly. In addition to the relatively low value of the Canadian dollar which maintains price-competitiveness, particularly in the United States, the mutual recognition of professional qualifications under the Comprehensive Economic and Trade Agreement (CETA) is expected to enable the industry to bid on service contracts within the European market. On average, the industry’s real GDP is projected to increase by 1.5% annually over the period 2022-2031. Despite the slight acceleration in output growth relative to the previous decade, employment growth is projected to slow significantly, averaging 0.9% per year, as a result of a pickup in productivity which is expected to increase by 0.6% annually. This situation reflects the need to improve productivity in response to growing difficulties in recruiting highly qualified workers and the need to improve cost-competitiveness in response to more open competition on the global market, particularly with the implementation of CETA. For example, many occupations related to engineers (NOC 2131, 2133, 2141, 2142) and architects (NOC 2151, 2152, 2153, 2154) are expected to keep showing signs of shortages over the next ten years. In a context where it will be increasingly challenging to hire additional workers, the industry is expected to adopt productivity-enhancing technologies such as building information modeling (BIM) systems to automate much of the work of design and engineering, 3D printing to produce components for modular construction, and drones to monitor and inspect large or difficult-to-access structures.

Real GDP and Employment Growth Rates in Architectural, Engineering, Design and Scientific R&D Services

Sources: Statistics Canada (historical) and ESDC 2022 COPS industrial projections.

Sources: Statistics Canada (historical) and ESDC 2022 COPS industrial projections.