Derrick Penner
Sun
British Columbia recorded an upswing in applications for building permits in June, according to Statistics Canada, giving the construction sector hope that it has reached the bottom of its downturn.
Builders in the province took out almost $632 million in permits for new construction in June, Statistics Canada reported Thursday, a 30-per-cent increase from May and the province’s best month of the year, driven largely by a jump in non-residential jobs.
The level is still 41 per cent below the $1.065 billion worth of permits builders took out in June 2008; the $3.037 billion in permits issued for the first half of 2009 is also down 41 per cent from the first six months of 2008.
However, the jump, including a small increase in residential permit applications, is encouraging to Philip Hochstein, president of the Independent Contractors and Business Association of B.C.
“A saying is that once you’re in a hole the first thing you do is stop digging,” Hochstein said in an interview. “I think we’ve stopped digging.”
B.C.’s increase in building permits helped lift national figures to an unexpected gain in June, Statistics Canada said, with $5.2 billion in new building permits issued during the month.
B.C.’s gain came in every component except commercial and industrial building permits.
Economists had expected permits to decline by about three per cent in June. The May increase in permit values was revised to 17.5 per cent from the agency’s previous estimate of 14.8 per cent.
The news wasn’t so good in Metro Vancouver, though, where permits dipped by a small margin, 1.1 per cent, to $245 million in June.
The biggest gains across the country came in Montreal (up 36.9 per cent) and Hamilton, Ont. (up 289.3 per cent). The value of permits declined in Calgary by 33 per cent.
However, industry representatives took note of an increase in residential building permits within the entire Metro region, which was a welcome sign.
Across B.C., builders took out almost $298 million in permits for new-home construction. That is nowhere near the $619 million issued in June 2008, but is a marked improvement on May, when municipalities handed out almost $263 million in permits.
“We were very pleased with the figures on the residential [side],” Keith Sashaw, president of the Vancouver Regional Construction Association, said. “That’s usually the first sector that comes out of a downturn.”
His association compiles its own report based on the Statistics Canada figures, which indicate a large part of the increase in residential permits, some $178 million, were issued in the region it covers, the Lower Mainland and southwest of the province, a 29-per-cent increase from May.
Hochstein said new-housing construction is key in jump-starting the commercial and institutional sectors.
“You don’t build the new Costco until there is a new [residential] subdivision,” Hochstein said.
In the meantime, he added that the construction industry is enduring the uncomfortable adjustment of paring back some of the increased building capacity that it had established during the boom.
He said a quirk of the federal infrastructure stimulus program, which requires all projects to be completed by 2011, has sped up the process.
Hochstein said the timetable precludes governments from rolling out large projects, in the $20 million-to-$30 million range, which leaves bigger construction firms chasing smaller contracts that they normally wouldn’t bid on, and the smaller contractors facing unusual competition.
The competition, Hochstein said, means “taxpayers are getting far greater value for their dollars than they did a year or two ago.”
Sashaw said his members are optimistic that some larger-scale projects, such as a new RCMP facility and health centres, will help buoy the sector in 2010.
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