Small and medium enterprise Business Barometer readings released last week by the Canadian Federation of Independent Business point to eroding confidence in B.C.
Both the short-term (three-month) and long-term (12-month) Business Barometer readings fell again, with the former down to 46.7 points (down 2.7 points month to month [m/m] and 11.7 points year to year [y/y]) and the latter at 50.8 points (down 3.7 points m/m and 21.1 points y/y). This marked a fourth consecutive monthly decline for the short-term index and the third consecutive decrease for the long-term index. While some of this downtrend likely reflects the benefits of a comparatively strong growth performance over the past year in the province, factors such as slowing demand, a housing recession, high inflation and interest rates are contributing to the slide. The latter two factors were also noted as headwinds in Statistics Canada’s Canadian Survey of Business conditions. Provincially, B.C.’s index was among the lowest in the country with a national short-term reading of 50 points (up three points m/m) and long-term reading of 53.5 points (unchanged m/m).
Average capacity use held steady at 77 per cent in August. That said, more SMEs surveyed (21 per cent) reported plans to reduce full-time staffing plans, and fewer business owners considered themselves in a good state of business health (35 per cent). With inflationary pressures and rising wages, business growth will in part by constrained by labour shortages in the foreseeable future. Meanwhile, concerns over fuel and energy costs moderated given lower prices observed globally in August.
Total dollar volume building permits rose in July, increasing 12 per cent over the previous month and 14.5 per cent above the trailing 12-month average. Higher volume was seen in both residential and non-residential permits.
Non-residential permits volumes led the way, up 23.7 per cent after having fallen 36.1 per cent the previous month while residential permits were up to a lesser extent of 7.9 per cent.
The growth in multi-family permits led the way for residential, as they were up 9.3 per cent.
This also represents the sixth consecutive month that the dollar volume amount for multi-family homes exceeded $1 billion.
Single-family homes also increased, but by only 3.2 per cent. Volumes in single-family homes have been relatively stable over the past year, ranging from $330 million to $380 million each month.
Non-residential permits were led by an increase in the public sector, which doubled to $255 million, which is about 8.7 per cent above its 12-month average.
Industrial permits were also up 10.6 per cent while commercial permits were a drag, down 14.2 per cent. Commercial permits volumes, however, remain 3.5 per cent above the previous 12-month average.
The metropolitan areas in B.C. saw a 7.5 per cent increase over the previous month. Growth was in the biggest areas, with Vancouver’s permit volumes increasing 9.5 per cent, followed by Victoria and Kelowna, which were up 43.1 per cent and 35.5 per cent, respectively. Permit volumes fell in the smaller urban areas of Abbotsford, Chilliwack, Kamloops and Nanaimo. •
Bryan Yu is chief economist at Central 1 Credit Union.
