B.C. Economic Snapshot December 14, 2013

Housing starts to edge higher in 2014

VANCOUVER, BC, Dec 14, 2013/ Troy Media/ – B.C. housing starts partially rebounded in November following a steep October decline, but remained consistent with the range observed since 2010. Urban market starts reached a seasonally-adjusted pace of 26,950 units in November, up 12.5 per cent from October, and 23 per cent above year-ago levels. Gains were led by a rebound in starts outside the Vancouver Census Metropolitan Area (CMA). While Vancouver CMA starts were unchanged, combined starts in other urban areas rebounded 50 per cent from October, led by multi-family activity.

Monthly starts comparisons can be highly volatile due to the impact of infrequent and large multi-family projects, and should be viewed with caution. While starts showed strong monthly and year-over-year gains in November, the underlying trend continued to tilt lower, suggesting a softening of construction momentum.

Year-to-date, provincial starts in urban areas were down 3 per cent through November. The decline was led by a 5 per cent decline in the Vancouver CMA. Starts were sharply lower in a number of Vancouver Island markets, led by Victoria (-10 per cent) and Nanaimo (-41 per cent). In contrast, new home construction in some larger interior markets was modestly higher, including Kelowna CMA (16 per cent), and Kamloops CA (6 per cent).

Housing starts are forecast to edge higher in 2014 to 26,500 units following a modest pull-back this year. Growth is expected to be led by markets outside Vancouver, reflecting a modest rise in demand and continued easing of excess new home inventory built up prior to the recession.

Automotive
New vehicle sales picked up in October following a September slide to re-affirm the year-long upward sales trend, following a brief mid-year lull. Total seasonally-adjusted new vehicle sales reached 15,750 units during the month, marking a 2.5 per cent gain from September and a near 9 per cent increase from a year ago.

Sales momentum has pushed year-to-date sales growth to 4.7 per cent over the first 10 month of the year. Dollar-volume sales were 8.7 per cent higher, reflecting strong growth in the higher-priced truck/ SUV segment of the market over passenger cars.

While good news for topline retail sales and new car dealerships, vehicle sales are a secondary economic indicator for B.C.’s economy. The province provides little value-added activity to the manufacturing process. Sales are largely a gauge of consumer confidence and the willingness to make large-scale purchases. Annual vehicle sales are projected to rise by a modest five per cent this year to about 185,000 units, the highest level since 2007. Gains are largely driven by replacement demand and pent-up activity following low sales in recent years given labour and elevated debt.

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