Major Decline For Permits

Major decline for permits

Geoffrey Scotton
Calgary Herald
Published: Tuesday, October 07, 2008

Alberta's construction sector — the engine of much of the province's jobs growth — is slowing rapidly, with building permit value across Wild Rose Country falling more than 19 per cent during August and year-to-date permit value down nearly 12 per cent — the sharpest decline in Canada.

The figures, released Monday by Statistics Canada, show a key facet of Alberta's economic success and much-admired job creation record — a booming construction sector — was slowing well before the current economic and financial crisis struck with a vengeance in mid-September.

“The weak construction permits report is consistent with (a) rapidly softening economy, both in Alberta and Canada,” ATB Financial senior economist Todd Hirsch said Monday. “The rate of declines in Alberta suggests that Alberta is not completely immune to the broader economic turmoil that is weighing down activity across North America.”

The August declines were concentrated in the non-residential segment, which until recently had been counteracting a longer-term trend of lower activity on the residential side. August residential permit value throughout Alberta was down 9.3 per cent, while the non-residential side experienced a 26.1 per cent drop.

StatsCan said the residential decline in August was attributable to a drop in plans for multi-unit dwellings. Over the first eight months of 2008, residential permit value was down nearly 29 per cent to $4.4 billion, while non-residential rose 12.6 per cent to $5 billion.

Hirsch noted the figures underscore a negative shift in outlook for Alberta's construction sector. In a quarterly survey of sentiment conducted by ATB in August, construction ranked lowest among six major provincial industries.

Although construction employment was up significantly between August 2007 and August 2008, according to figures from Alberta Employment and Immigration, the sector's unemployment rate also jumped, rising to 4.2 per cent from 3.5 per cent in the same month a year earlier. Only the beleaguered hospitality sector, with a six per cent jobless rate, was higher, although it improved from 2007.

In addition, the pace of job creation in construction has decelerated sharply as 2008 has progressed.

Within Alberta, the StatsCan figures showed that Calgary's building permit value for the census metropolitan area plunged 27.2 per cent in August to $316.5 million, while Edmonton experienced an 18 per cent decline. More telling, perhaps, of the longer-term pattern is that total value in the January to August period in Calgary was 22 per cent lower than the same period a year earlier, while Edmonton's fell 11.2 per cent.