Pandemic's Economic Impact: Building Permits

Statistics Canada released the May building permit numbers today and they document the impact of COVID-19 on residential, business, industrial and institutional capital investment quite nicely.   The good news is that the total value of building permits issued by Canadian municipalities in May grew  20.2% to $7.4 billion.  This was a nice rebound following declines of 13.4% in March and 15.4% in April. Indeed, on a monthly basis, this was the largest percentage increase since March 2009, and according to the report it coincided with the relaxing of COVID-19 construction restrictions in Ontario, Quebec and Prince Edward Island. However, the May level is still 20.4% below the last peak observed in January 2020 and when the year-over-year statistics are looked at, we are down 10 percent.





The year-over-year percentage changes are important to look at in that they provide a better long-term comparison and they reveal that some Canadian CMAs are actually rebounding nicely.  Brantford and Barrie on a year-over-year basis saw increases of over 200 percent.  Peterborough and Thunder Bay were next with annualized increases of 51 and 44 percent respectively.  Indeed, 13 of Canada's 34 CMAs saw increases year-over-year including even Toronto at 11 percent and Windsor at 10 percent.  Both cities were exceptionally hard hit by COVid-19.  The worst hit cities in terms of annualized declines in building permit values were Kingston, Moncton, Gatineau (Part of Ottawa-Gatineau)  and Saskatoon.

For some of the smaller cities, the rebound is a bit of a small number's game. Thunder Bay, for example reported 9.5 million dollars in permits in May of 2019 and 13.7 million in May 2020.  I did notice a new mini-mall having land cleared in the River Terrace area so if that was issued in May, it would have helped the numbers.  A new mini-mall would obviously not have the same impact on numbers in the GTA. As for Peterborough, over the same period, the numbers go from 12.2 million dollars to 18.5 million.  Winnipeg, on the other hand went from 254 million dollars to 151.7 - in terms of scale, a much more impactful drop. As for Toronto, it goes from 1.6 to 1.8 billion dollars and Hamilton from 187 billion  to 255 billion dollars.

Interesting stuff.