About 9,700 people were working in construction in Greater Victoria last month — up nine per cent from December and the largest January gain on record.

But the job count on construction sites has slipped almost seven per cent year-over-year in the region — and has slid 11 per cent for the entire Island — as the pace of building slows amid an uncertain economy and tightened government spending.

A report from the Vancouver Island Construction Association released Wednesday said building permits for the Island were nine per cent lower in 2012 at $1.2 billion, compared to $1.317 billion in 2011. The biggest decline was in institutional and government permits, nearly halved to $65.2 million last year.

Greg Baynton, chief executive of the association, said that while the industry is “cautiously optimistic” about 2013, the real growth is expected in 2014.

He said January’s bump in Greater Victoria’s employment had a lot to do with ongoing shopping centre projects like Uptown, Hillside and Tillicum and a handful of condominium projects “that are sustaining us during a tough time in the industry.”

Baynton expects only “modest gains” in activity this year. He cited possible starts on the $1-billion John Hart Dam on the North Island and new multimillion-dollar high schools on the West Shore and in Oak Bay, as well as seismic upgrades on several others as good signs for the industry.

But he cautioned those will be early-stage projects, and probably not at full employment until 2014.

Construction employment on Vancouver Island and the Coast regions peaked at about 24,500 workers in 2012, 3,000 fewer than in 2011 and well off the record levels of 38,000 in 2008 when construction was booming. Baynton said the industry is now settling back to “pre-recession levels.”

“The near-term outlook is for a seasonal rise in construction activity, but for trends to remain down or low,” he said in the report. “The region’s economic and population growth will remain modest this year and, as a result, [so will] construction activity.”

Baynton said the fact there were no new major construction announcements or spending in Tuesday’s Throne Speech doesn’t bode well as all levels of governments tighten purse strings. He is hopeful a newly formed Deputy Ministers Industry Infrastructure Forum, which will bring health, education, highways and other major provincial departments around the table with companies this spring, will give construction plans more long-term certainty.

The association noted government spending last year on construction plunged to its lowest level since 2003.

“Usually governments in an election year tend to throw a little money out there, but they are struggling to balance a budget and that’s the priority right now,” said Baynton.

The return of the provincial sales tax, replacing the HST, could have an impact with some activity postponed until after April 1 providing a temporary pickup. But Baynton doesn’t expect a huge surge in building as “business costs will be higher and the PST cannot be expensed.”

Despite the slowdown, Baynton said construction companies are still in need of skilled workers. “The key word here is ‘skilled,’ ” said Baynton. “There are a lot of apprentices, but they need guys who are trained.”

He said many of those workers are heading to energy-sector jobs in northern B.C. or Alberta. “All you have to do is go to [Nanaimo] airport any morning. It’s full of guys with hardhats and lunchkits leaving the Island.”

For the report, www.vicabc.ca

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