July 13, 2020: Employment (June 2020) & Building Permits (May 2020)

July 13, 2020

Statistics Canada released new employment and building permit data recently, with both showing that Ontario’s construction industry is progressing towards pre-pandemic activity levels.

Ontario’s Construction Employment Begins to Recover, Province’s Unemployment Rate Falls

Ontario’s construction industry added 34,100 jobs in June, a 7% month-over-month increase. As observed in the previous month’s employment data, construction employment’s trajectory appears similar to employment in the province in general, which had 6% month-over-month job growth. For both construction and the province in general, seasonally-adjusted employment is about 10% less than it was in February before any industry closures occurred. Compared to June last year, construction employment in Ontario is down 5% (unadjusted for seasonality).

The unemployment rate in Ontario fell to 12.2% in June after posting a record high in the previous month. While it has decreased, this seasonally-adjusted unemployment rate is still the highest the province has seen since 1982.

ICI Building Permit Values in Ontario Rise by 37%

Ontario’s ICI building permit values began to recover in May, rising by 37% over April to near pre-pandemic levels. These permit values were also 5% higher in May compared to May 2019 (unadjusted for seasonality). Commercial permit values grew by 26% month-over-month, while institutional permitting increased by 49%. Ontario’s industrial permit values increased by 67% in May over April, reaching their highest monthly total since January.

Among Ontario’s sixteen metropolitan areas, ICI permit values increased in all but three (Oshawa, St. Catharines-Niagara, Windsor). In May, building permit issuance appears to have returned to pre-pandemic levels in many metro areas. Toronto, London, Guelph and Peterborough had their highest monthly ICI permit totals so far in 2020, while Hamilton was at its highest in twelve months. In Brantford, ICI permit values were higher than any month in at least the past decade. Ottawa’s ICI permit values nearly doubled in May over April, but compared to earlier months this year, they are still significantly low.

Permit Value Recovery Impacted by Municipal Delays and Backlogs

When interpreting these building permit numbers it’s important to consider the disruptions in the ability of municipal governments to issue permits or approve development applications. Some municipalities may not be issuing permits or approving development applications at full capacity, while others may be increasing capacity to deal with the backlog.

The OCS asked Ontario’s ICI contractors about this issue in the recent survey: Coronavirus Contractor Survey 3: Reemergence and Adaption.  The survey, which was conducted between June 16-19, found that 33% of ICI contractors in the province have experienced delays in getting permits processed.

McMillan LLP has been providing regular updates on the status of building permit and development application processing in Ontario’s larger municipalities. It’s most recent report from July 6 can be found here.

The firm reports, for example, in the City of Ottawa: “While all permit submissions will be processed to approval, only applications that qualify as an essential service under the Emergency Management and Civil Protection Act will be made available for issuance.” In the City of Toronto there is reportedly a backlog of over a thousand development applications. Toronto City Council adopted a motion on June 29 that recommends increasing staff and appointing additional Committee of Adjustment members with the goal of clearing the backlog by the end of the year.