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BC economic snapshot for Aug. 13, 2011

BC economic snapshot for Aug. 13, 2011

Troy Media – By Bryan Yu

A rise in multi-family construction pushed housing starts in B.C. higher in July. Total housing starts in the province rose to a seasonally-adjusted annualized rate of 30,000 units, up 29 per cent from June and 33 per cent above July 2010. Despite the large month-to-month gain, aggregate new home activity has been highly volatile since early 2010, fluctuating around an average of 26,400 units.

In B.C.’s urban areas, multi-family starts rose 48 per cent from June to reach an annualized rate of 20,800 units, while single-detached starts increased four per cent to 7,400 units. Although total housing starts have been volatile, recent activity suggests that single-detached starts troughed in early 2011 following a year-long downtrend and are now on a modest upward trend.

Meanwhile, the underlying trend in the volatile multifamily sector continues to point higher. Housing starts in Metro Vancouver lagged the provincial performance in July, rising 16 per cent to an annualized rate of 18,200 units.

Total annual provincial housing starts this year are expected to remain close to 2010 levels, but fall short by three per cent, reflecting weaker early year activity. However the underlying trend will be positive and continue to rise through 2013. Near-term growth could be limited by the recent dampening in housing demand, reflected in declining sales of existing homes.

Exports increase for second straight month

Export volumes of B.C. goods to international markets rose for a second consecutive month in June to reach a seasonally-adjusted $2.9 billion, up 3.1 per cent from May. Relative to June 2010, monthly exports were 10.9 per cent higher.

This was the highest level of activity since October 2008 and, while monthly exports volumes are volatile, the underlying trend has generally been positive since the last quarter of 2010 due to higher resource prices and demand for goods.

June’s gains were broad-based among industry sectors. Forestry products rose 3.7 per cent from May to a seasonally-adjusted $830 million. Activity in this sector has climbed since hitting their recession-fuelled low in early 2009, but remains below the pre-recession highs observed in early 2006.

The uptrend reflects a surge in demand from China which has offset continued weakness of U.S. demand for B.C. wood products. Through June, year-to-date exports of solid wood products to China were up 167 per cent from 2010, reaching $734 million, while exports to the U.S. were down 17.6 per cent. Pulp and paper product exports to China were also 63 per cent higher.

Meanwhile, exports of industrial goods and materials rose four per cent to $585.5 million, and energy exports remained unchanged at an elevated level of $938 million.

A slower rebound in activity has been observed for exporters of machinery/equipment and other consumer goods, reflecting the weak economic recovery in the U.S. and high Canadian dollar.

June’s gain pushed year-to-date volumes to $15.9 billion, up 13.7 per cent from the same period in 2010.

Bryan Yu, Central 1 Credit Union

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