B.C. international exports lagged sharply behind year ago levels in May, but exporters have experienced less of a hit from the COVID-19-driven downturn than other provinces.
Unadjusted goods exports reached $3.236 billion in May, down 18.4% from the same month in 2019. In comparison, national exports fell 39.8% from a year ago, owing to sharper declines in Ontario, Alberta, and Newfoundland and Labrador.
Economic policies implemented by provincial governments varied, depending on the spread of COVID-19. They also reopened at different paces.
A plunge in oil prices also triggered a retrenchment in production and dollar-volume exports.
While COVID-19’s impact has cut into global trade and demand, lack of exposure to the hardest-hit sectors has limited the impact on B.C.’s economy. Year-over-year declines also exaggerate the hit to the export sector as sales were already in decline over the past year due to severe forestry sector weakness.
Year-to-date, exports declined 15% through May. Exports have likely hit bottom, but weak export activity will continue given the deep impact of COVID-19.
The International Monetary Fund cut its global outlook for GDP to -4.9% for 2020, with a relatively modest recovery in 2021. The recession will reduce demand for goods, as well as commodity prices.
Led by the residential sector, B.C. building permits rose for a second straight month in May to a seasonally adjusted $1.267 billion. Despite the gain, volumes remained soft with levels down 11.9% from same-month 2019 and 23% year-to-date.
Residential permits rose for a second straight month after plumbing a near six-year low in March. Permits rose 12.3% from April to a seasonally adjusted $1.005 billion, led by a 27% increase in Metro Vancouver and 20% rebound in Victoria. Policy factors including hikes in development costs and initial effects of the pandemic on the industry have contributed to sharp volatility in permits. Year-over-year, permits rose 19.3% following a 60% decline in April but year-to-date were 14.3% lower
Non-residential permits continued to slump, which is not surprising given negative impact on businesses caused by COVID-19.
Related structure permits contracted 17.9% from April. Total year-to-date non-residential permits declined 39%, including commercial (-49%), industrial (-27%), and government (-10%).
In metropolitan areas, declines were widespread, with total year-to-date permits down 32.1% in Abbotsford-Mission, 22.4% in Vancouver and 29% in Kelowna.•
Bryan Yu is deputy chief economist at Central 1 Credit Union.
