Rise in Canadian building permits

By Richard High11 July 2008

The value of Canadian building permits rose for the second month in succession in May as an increase in non-residential construction cancelled the fall in the residential sector, according to the latest survey by Statistics Canada, the country's national statistics agency.

Contractors took out CA$ 6.6 billion (US$ 6.5 billion) in permits in May, up +1.1% from April and the highest value for permits since October 2007. The total was +6.7% above the monthly average for 2007.

It was the first back-to-back increase in intentions since November 2006, and, said Statistics Canada, could point to an up-swing in activity over the coming months. The value of building permits has followed an upward trend since the beginning of the year.

In the non-residential sector, municipalities issued CA$ 2.9 billion (US$ 2.85 billion) in permits, up +12.8%, a second consecutive gain. The rise came mostly from strong increases in the industrial and institutional intentions.

The value of permits in the residential sector, which has been on a downward trend since September 2007, fell- 6.6% to CA$ 3.7 billion (US$ 3.6 billion) in May, the result of a considerable decrease in the value of multi-family permits.

Non-residential: Strong gains in both industrial and institutional

The value of building permits in the non-residential sector increased by +12.8% in May, with gains in all three components, following a +27.8% increase in April. The trend for non-residential construction intentions edged up in the previous six months, as a result of growth in the commercial component.

In the industrial component, the value of permits issued increased +62.1% to CA$ 536 million (US$ 528 million) in May, the highest level since June 2006. The gains came mostly from utility buildings.

In the institutional component, intentions rose +16.4% to CA$ 646 million (US$ 637 million), largely as a result of new hospitals and schools. May's value was +12.7% higher than the average monthly level in 2007, an exceptional year for institutional construction.

In the commercial component, municipalities issued permits worth CA$ 1.7 billion (US$ 1.67 billion), up +2.1% following a +36.4% gain in April. It was the fifth increase in six months and took the level to its highest point in a year. The increase came from construction intentions for warehouses.

Residential: Multiple-family housing brings down intentions

A strong decline in the value of permits for multiple-family dwellings brought down intentions in the residential sector in May.

The value of multiple-family permits fell -15.5% to CA$ 1.5 billion (US$ 1.48 billion), after rising +31.4% in April. Even so, May's level was +6.2% higher than the average monthly level registered in 2007. Municipalities approved 11040 multiple-family units, down -7.9%.

After two month of declines, the value of single-family permits edged up +0.5% in May to CA$ 2.2 billion (US$ 2.17 billion). The number of single-family units authorized declined -2.3% to 8116, the lowest since May 2001.

The overall number of residential units approved has been on a downward trend since the summer of 2007.

Permits up in half of the provinces

The value of building permits increased in half of the provinces in May. Ontario had the largest increase in terms of dollars, followed by British Columbia and New Brunswick.

Ontario permits increased by +3.1% to CA$ 2.5 billion (US$ 2.46 billion), due to a +26.4% jump in the value of construction intentions for non-residential buildings. The non-residential sector reached its fourth highest value since January 1989.

Also posting gains were British Columbia (+5.7%) and New Brunswick (+67.1%). New Brunswick reached an all-time high with permit values of CA$ 122 million (US$ 120 million). Both provinces had strong intentions for non-residential.

In contrast, Alberta and Saskatchewan experienced large declines (in terms of dollars). In Alberta, a reduction of -3.7% to CA$ 1.2 billion (US$ 1.18 billion) came mainly from drops in the values of institutional and multiple residential projects. After a record high in April, intentions in Saskatchewan decreased -19.5% due to lower levels in both residential and non-residential sectors.

Permits up in less than half of the metropolitan areas

Of the 34 census metropolitan areas, 16 recorded gains in the value of building permits in May.

The largest increase (in dollars) occurred in Vancouver, where a record monthly high in the non-residential sector more than offset a decline in intentions for residential dwellings.

Edmonton also posted a significant increase, as a result of strong growth in both residential and non-residential sectors.

In contrast, the total value of permits in Toronto declined in May, due to large drops in multiple dwellings. This came on the heels of the second highest month on record for multiple housing.

The Building Permits Survey covers 2400 municipalities representing 95% of the population. The communities representing the other 5% of the population are very small, and their levels of building activity have little impact on the total

The Survey also provides an early indication of building activity.

The value of planned construction activities shown in this release excludes engineering projects (e.g., waterworks, sewers or culverts) and land.

The report divides the metropolitan area of Ottawa-Gatineau into two areas: Ottawa-Gatineau, the Quebec part, and Ottawa-Gatineau, the Ontario part.

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