By Andrew Snook
A COVID-19 world requires 12-month comparisons
By Andrew Snook
Since the official start of the COVID-19 pandemic this past March, Canada’s construction industry has taken its biggest hit in recent history (possibly ever).
In April, building permit values plummeted, fuelled by the combination of a pandemic lockdown, the halting of many residential and non-residential construction projects across the country, and
How bad was it?
In April 2019, the total value of building permits in Canada was just over $9.3 billion (nearly $5.8 billion in residential permits and just over $3.5 billion in non-residential permits). In April 2020, building permit values fell to $5.8 billion in total. That’s a drop of nearly 40 per cent in total value, which, of course, was cause for great concern within the industry (to put it mildly).
So, many people in the industry were anxiously awaiting the numbers to come in for May 2020 to see if this trend would continue. The report on the Statistics Canada website posted big month-to-month increases in building permit values, making everything look quite rosy. However, this doesn’t portray an accurate picture of the impact of the pandemic – especially since April 2020 was likely the steepest decline in building permit values in recent history.
When reviewing month-to-month comparisons to look for upward and downward trends, it’s also important to review the 12-month comparisons (and further back than that, in many cases). This is especially true when reviewing the impact that the pandemic has had, since that impact has been entirely felt, to date, in 2020.
In May 2020, the total value of building permits in Canada was just under $8.7 billion (nearly $6.0 billion in residential permits and just over $2.7 billion in non-residential permits). Is this a significant increase from April 2020? Absolutely, it’s a huge gain. But I personally believe the 12-month comparison paints a more accurate picture of the what the industry looks like right now.
In May 2019, the total value of building permits was just over $10.2 billion (nearly $6.5 billion in residential permits and almost $3.8 billion in non-residential permits). This means the 12-month comparison in building permits is showing a decline of nearly 15 per cent from the same time last year. Obviously, the near-15-per-cent decline in 2020 over the 12-month comparison is far better than the 40-per-cent decline experienced in April. That said, it’s still down significantly, and that’s still going to have a negative impact on the industry.
I’m not trying to rain on anyone’s parade, just trying to manage expectations a little. I am hopeful that declines in positive COVID-19 cases will continue in Canada, and that the industry will continue to experience a recovery from this past April, but we’ve still got a way to go to get back to where we were.