Economic Snapshot June 15, 2013

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VANCOUVER, BC, Jun 15, 2013/ Troy Media/ – Fewer attached and apartment unit housing starts in Metro Vancouver led to an overall decline in provincial activity in May.

Total housing starts in B.C.’s urban markets fell for a second consecutive month to a seasonally-adjusted annualized rate of 21,300 units, down 7.4 per cent from April marking a reversion to weaker levels seen from November through February. The retreat was led by an 18 per cent pull-back in Metro Vancouver, while starts in the rest of the province rose for a second straight month.

Provincial multi-family starts were down nearly 13 per cent from April, which was offset slightly by a 7.5 per cent gain in single-family activity. Despite the brief uptick in activity over the previous two months, housing starts have decelerated over the past six months and were below same-period levels from 2012.

Through May, year-to-date urban housing starts were down 11 per cent to 8,870 units on lower multi-family construction. Metro Vancouver accounted for most of drop, but areas such as Nanaimo, Courtenay and Prince George also recorded relative large pull-backs from last year.
While monthly housing starts are highly volatile and we are likely to see another spurt in new home starts in coming months given the sharp gain in April apartment permits, the slow underlying trend is likely to persist through the end of the year. Home sales, which typically lead housing starts, remain low on tepid demand despite some signs of stabilization.

Meanwhile, new and existing home inventory remain high in a number of markets, pointing to an overhang of product and a signal to builders to tap on the brakes. Unsold developer-owned inventory is at a decade high in both Metro Vancouver and Victoria and remains elevated in Kelowna and Nanaimo despite falling off their highs. We forecast annual housing starts, in both urban and rural areas, to reach about 24,800 units this year – a 10 per cent drop from 2012 and the lowest since 2009.

Manufacturing

Manufacturing sales in B.C. edged lower in April but remained at levels consistent with the first quarter of the year and near the post-recession high. Total sales reached a seasonally-adjusted $3.37 billion during the month, down 0.5 per cent from March, but more than 3.5 per cent ($373.5 million) above same month 2012.

A lift in activity since the end of 2012 has pushed year-to-date growth to about 3 per cent.
While overall sales are up, gains have been concentrated in a few select industries, specifically in wood products manufacturing sector. Through the first four months of the year, wood products shipments were up 41 per cent ($812.5 million) from the same period in 2012 as increased demand from the U.S. led to sharp gains in the dollar volume of lumber and engineered-wood shipped.

While some gains were observed in other sectors, manufacturing activity was lower in most industries, with paper manufacturing sales down 14 per cent ($229.6 million). Machinery sales were down by a modest 3 per cent.

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