Aligning with July export gains, B.C. manufacturing picked up steam during the month. Manufacturing sales climbed 2.2% from June and 4% year-over-year to reach a seasonally adjusted $3.79 billion. National sales edged up 0.1% from the previous month, but fell 2.6% from a year ago.
B.C. manufacturers have fared well relative to the rest of the country with a year-to-date gain of 1.9%. Nationally, dollar-volume manufacturing was flat despite gains in Ontario as low prices and production curtailment due to the Alberta wildfires cut petroleum-related production. B.C.’s gain largely reflected growth in the wood-product sector of 10% underpinned by sawmill production and a large increase in “other wood manufacturing.”
Growth in primary metal manufacturing (29%) was also a key driver.
Manufacturing will continue to benefit from a low Canadian dollar and an improving U.S. economy but faces risks from forestry. With the expired softwood lumber agreement grace period coming to a close by mid-October and a new deal seemingly out of reach, tariffs are likely to be introduced by the U.S. This is a key risk to further sector gains and manufacturing volumes as a whole.
On the provincial housing front, all eyes have understandably been on the sharp curtailment of activity in Metro Vancouver due in part to the impact of the new foreign buyer tax, but solid performances elsewhere in B.C. have provided some offset.
Provincial MLS sales fell 10% from July and for a fourth straight month to a seasonally adjusted 8,350 units in August.
Lower Mainland sales declined 16%, while the rest of the province eased just 3% and remained near mid-2000 highs. Provincial year-to-date sales growth narrowed to 22% from 25% in July, with a gain of 17% in the Lower Mainland and 29% elsewhere in the province.
Stronger sales momentum and market conditions persist in the Vancouver Island and Thompson-Okanagan regions. Economic growth, low interest rates, pent-up demand, population inflows from other provinces and the Lower Mainland, and low new home inventories are critical drivers.
Lower Mainland conditions remained consistent with a sellers’ market, but with weaker momentum particularly in the detached market.
B.C.’s average house price fell August to a seasonally adjusted $592,814, down 15% from July, 21% from January, and 6% from a year ago, but beware the danger of averages. This drop largely reflects geographic- and product-composition effects rather than real price declines. •
Bryan Yu is senior economist at Central 1 Credit Union
