Jeff Bonang stands by his deck which is under construction at his home in Porters Lake, NS.
If you want them to build it, a thousand bucks doesn't hurt.
Contractors and builders are pointing to the federal government's tax credits as successfully giving a push to homeowners considering renovations, fuelling a rise in retail sales for hardware, building materials and home supplies in May.
Maurice Meagher's Halifax franchise of U.S.-based construction company Archadeck is booked solid through the summer building decks, patios and fences for Nova Scotians with houses in need of a structural facelift.
One of those was Jeff Bonang's house in Porters Lake near Halifax, where Mr. Meagher's crews are hard at work. What started as a plan to replace an aging wood deck became a $60,000 project to build a gazebo, a hot tub and a sunroom.
Mr. Bonang said his family was planning the renovations anyway, but the rebate will help. And Mr. Meagher said at least part of the boom in his business is thanks to Ottawa's tax credit, unveiled as part of the stimulus package in the last federal budget. It offers homeowners a tax rebate of up to $1,350, aiming to offset the downturn in new home construction.
Mr. Meagher's customers are thinking smaller this year, but there are more of them: Archadeck has seen a 40-per-cent jump in project volume as more Haligonians decide it's time to tackle the renovation project they've been putting off.
"Without that incentive maybe we wouldn't be getting those calls," Mr. Meagher said.
"People had been kind of sitting on the fence, looking at projects that maybe they'd been thinking about for a while."
Over all, Statistics Canada reported, retail sales rose a significant 1.2 per cent in May from a month earlier, surpassing analysts' expectations and more than offsetting the 0.6-per-cent decline in sales in April. While part of the increase in sales was because of higher prices, the actual volume of sales rose too, up 0.7 per cent from a month earlier.
Sales are still down 4.9 per cent compared with a year ago, but have been recovering gently since touching a low point at the end of last year, mainly because of increased purchases of new vehicles, and more recently, home renovation materials.
John Kenward, chief operating officer of the Canadian Home Builders' Association, said government incentives - both the renovation credit and rebates for anyone undertaking green retrofits, which were increased 25 per cent this spring - are to thank for the construction spike.
"People are wishing to take advantage of it, there is a deadline for using it, and therefore ... it certainly stimulated activity."
Sales in the building and homes supplies sector rose by 1 per cent in May - double the rate of increase seen in April. Home centres and hardware stores were particularly busy, as were outlets selling specialized building materials and gardening supplies.
Housing starts have plunged about 60 per cent from their peak of last year, and the federal tax credit is helping, somewhat, to soften the blow on the construction industry, said Alex Carrick, chief economist at Reed Construction Data.
But Mr. Carrick added that the renovation frenzy probably won't last: The tax incentive is likely just bringing forward activity that would have happened anyway. The Bank of Canada seems to have the same concern. In its policy statement Tuesday, the central bank warned that some of the momentum that is becoming obvious in the Canadian economy these days may fade.
Still, the federal stimulus for infrastructure is only just beginning to touch the construction industry in Canada, and is likely to pick up speed, Mr. Carrick said. While non-residential construction has fallen off dramatically, most new projects beginning now are government-funded.
"The stuff is starting to come, and it's going to make an impact in the second half of the year."
Renewed consumer interest in new vehicles, especially light trucks, led May's retail gains. Sales in the automotive sector rose 2.4 per cent from April, with new car sales increasing 3.4 per cent and gasoline sales rising 0.9 per cent.