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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 per cent.
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 per cent, 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
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