Construction activity in Alberta had already started to slow early in 2015, but new data released this morning suggest that not much of a pick-up is expected this year.
According to Statistics Canada, a total of $1.1 billion in building permits were issued from Alberta municipalities in January of 2016 (adjusted for seasonality). That’s very close to the total seen in both November and December, but over the last complete 12 months, the value of permits is down eight per cent compared to the previous 12-month period.
Residential building permits tumbled a bit in January to $604 million, the lowest monthly level since October of 2011. That is not surprising, since the number of new housing starts—a separate economic indicator in the housing market—has also slumped. Slower in-migration to the province and weaker consumer demand has dampened home building activity.
Non-residential building permits, however, picked up a small amount in January compared with the previous month. This category of permits includes commercial (such as office towers), industrial and government and institutional projects. The latter category could see a bit more lift in 2016 given both the federal and provincial governments suggestions that infrastructure spending will be boosted this year.
Yet regardless of the dip in overall permits recently, the situation is better described as soft rather than catastrophic. There could still be more pull-back in building permits in the coming months, but given the economic climate in the province, an eight per cent dip in activity is actually better than what many would have expected.*
*Courtesy of Todd Hirsch • Chief Economist, ATB Financial