Building permit value in Alberta riding the inflation wave
After adjusting for cost changes, year-to-date construction intentions were down 10.6%
By Cohen Perratt, ATB Economics 23 June 2022 1 min read
At 1.3 billion in May, the seasonally adjusted value of building permits issued in Alberta moved $34 million (+2.8%) higher from April.
The value of non-residential permits rebounded after three consecutive monthly declines since February. On an unadjusted basis, non-residential permits jumped 19.5% year-to-date and offset a 2.7% decline in the value of residential permits issued over the same period.
Inflation continues to play a big role in pushing construction costs higher. Through May, the value (in current dollars) of total permits was up 4.2% relative to the same period last year. However, after adjusting for prices, the value (in constant dollars) of these permits was down 10.6% during the same time frame, suggesting a significant increase in costs.*
A total of 20,518 permits were issued in the province through May, down 2,829 (-12.1%) than at the same point in 2021.
The story was fairly similar nationally where the year-to-date increase in permit value was accompanied by higher construction costs.
*It is difficult to precisely isolate the role played by higher construction costs because there are also changes in the type and location of the proposed buildings that affect the overall value of permits.
Answer to the previous trivia question: Adam Smith was an 18th-century Scottish economist, philosopher and author and is considered the father of modern economics.
Today’s trivia question: Which classical economist is known (among other things) for his theory of comparative advantage?