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Commercial Leading Indicator (November 2020)

Posted by Ron Neal on Tuesday, December 1st, 2020 at 9:54am.

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May30-1
 

Commercial Activity Rebounded in Q3 2020

The BCREA Commercial Leading Indicator (CLI) rebounded in the third quarter of 2020 from 122.3 to 136.9, representing the first increase after four consecutive quarterly declines. It was the largest increase in the indicator since the start of the CLI series in 1999, reflecting a recovery from a significant drop in the first half of 2020, due to strict COVID-19 containment measures. Compared to the same time last year, the index was up by 1.3 percent.

The third quarter of 2020 saw the resurgence of key economic industries in BC, particularly the hard-hit retail sector, as brick-and-mortar stores reopened and travel restrictions in the province were eased. Employment in key real estate sectors and manufacturing also rebounded in the third quarter, while the financial component of the CLI declined.

Although the CLI posted a strong recovery in the third quarter of 2020, this is not necessarily reflective of actual commercial real estate conditions, where a rebound in retail sales and employment would normally imply a rebound in retail and office space. The realities of the COVID-19 pandemic are currently driving a wedge between what we see in the data and what is being experienced on the ground.

BC’s economy reopened in the third quarter of 2020 after it was halted in the previous quarter by COVID-19 containment measures. Manufacturing sales were boosted by strong demand for wood products supplying robust activity in new home construction in Canada and the US. The increase in wholesale trade was driven by higher sales in motor vehicles and building materials, as many households undertook home renovations during this period. Retail sales also pulled ahead in the third quarter, increasing by 16.3 percent, representing the largest quarterly growth since the start of the CLI series in 1999.

Employment growth in key commercial real estate sectors such as finance, insurance, real estate, and leasing was up by about 15,000 jobs, recouping all losses reported in the first half of 2020. Manufacturing employment was also up by 12,500, nearly eclipsing job losses that started in the third quarter of 2019.

The CLI’s financial component was negative in the third quarter of 2020, as a fall in REIT prices more than overcame the impact of a reduction in risk spreads due to the Bank of Canada’s actions to provide liquidity in short-term credit markets.

To view the full Commercial Leading Indicator PDF, click here.

For more information, please contact:

Brendon Ogmundson
Chief Economist
604.742.2796
bogmundson@bcrea.bc.ca 
Kellie Fong
Economist
778.357.0831
kfong@bcrea.bc.ca 

BCREA is the professional association for more than 23,000 REALTORS® in BC, focusing on provincial issues that impact real estate. Working with the province’s 11 real estate boards, BCREA provides continuing professional education, advocacy, economic research, and standard forms to help REALTORS® provide value for their clients.

To demonstrate the profession's commitment to improving Quality of Life in BC communities, BCREA supports policies that help ensure economic vitality, provide housing opportunities, preserve the environment, protect property owners and build better communities with good schools and safe neighbourhoods.

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The Neal Estate Group is your #1 source for all of your Victoria BC real estate needs. Get in touch with us online or by phone at (250) 386-8181 to speak with a Victoria real estate buying or selling expert today. With decades of experience as a top selling Victoria REALTOR® and ranked in top 1% globally with over 5,000 transactions and $1 Billion SOLD, Ron Neal & The Neal Estate Group have the industry experience and market knowledge to help you make smart and informed buying or selling decisions. 


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