Canadian new building permits plunge in May
By SHARON SINGLETON QMI Agency
Last Updated: July 6, 2010 2:04pm
Canada’s new building permits fell five times more than forecast in May, adding to evidence the country’s housing market is cooling.
The number of new building permits issued by Canadian municipalities dropped 10.8% from the previous month to a total value of $6 billion, Statistics Canada said. That compares with economists’ forecasts for a decline of about 2%.
Building permits are seen as a volatile indicator and therefore not reliable pointers to a trend, although put together with other measures they suggest a significant slowdown in the country’s booming property market. A recent survey by the Canadian Real Estate Association said the market is now well past its peak, which probably hit in the fourth quarter.
Residential permits fell 5.3% to $3.7 billion due to a 9.2% drop in requests for single-family homes, the data showed. It was the second monthly decline.
Demand for condos rose 2.5% to $1.3 billion, StatsCan said.
“The fall was quite a bit more than expected, with the negative surprise coming in the residential sector,” BMO Capital Markets economist Robert Kavcic said. “These back-to-back declines are not good news for the housing market and point to slower growth going forward.”
Non-residential permits dropped 18.3% to $2.3 billion, mainly due to plunging demand for commercial buildings such as hotels, warehouses and office buildings. Requests in the commercial sector dropped 35.2%.
Activity in the industrial sector remained strong, with the value of permits jumping 47.1% to $644 million in the fifth monthly increase. The gains
were mainly due to factories in Quebec and utilities in Ontario, StatsCan said.
Kavcic said the data on its own is unlikely to have much impact on the Bank of Canada’s upcoming rate decision. Though given the ongoing uncertainty in the global economy, BMO expects the central bank to raise again in July and then to pause.
Building permits dropped in seven provinces, with the biggest decreases in Ontario, Alberta and Nova Scotia, StatsCan said. The decline in those provinces was mainly due to a drop in non-residential permits, which had reported strong gains the previous month.
British Columbia and Saskatchewan posted the biggest gains on demand for multi-family dwellings and institutional permits, it said.
The stock market and the loonie shook off the weaker-than-expected data to rise, with investors regaining appetite for riskier assets and commodities.
By SHARON SINGLETON QMI Agency
Last Updated: July 6, 2010 2:04pm
Canada’s new building permits fell five times more than forecast in May, adding to evidence the country’s housing market is cooling.
The number of new building permits issued by Canadian municipalities dropped 10.8% from the previous month to a total value of $6 billion, Statistics Canada said. That compares with economists’ forecasts for a decline of about 2%.
Building permits are seen as a volatile indicator and therefore not reliable pointers to a trend, although put together with other measures they suggest a significant slowdown in the country’s booming property market. A recent survey by the Canadian Real Estate Association said the market is now well past its peak, which probably hit in the fourth quarter.
Residential permits fell 5.3% to $3.7 billion due to a 9.2% drop in requests for single-family homes, the data showed. It was the second monthly decline.
Demand for condos rose 2.5% to $1.3 billion, StatsCan said.
“The fall was quite a bit more than expected, with the negative surprise coming in the residential sector,” BMO Capital Markets economist Robert Kavcic said. “These back-to-back declines are not good news for the housing market and point to slower growth going forward.”
Non-residential permits dropped 18.3% to $2.3 billion, mainly due to plunging demand for commercial buildings such as hotels, warehouses and office buildings. Requests in the commercial sector dropped 35.2%.
Activity in the industrial sector remained strong, with the value of permits jumping 47.1% to $644 million in the fifth monthly increase. The gains
were mainly due to factories in Quebec and utilities in Ontario, StatsCan said.
Kavcic said the data on its own is unlikely to have much impact on the Bank of Canada’s upcoming rate decision. Though given the ongoing uncertainty in the global economy, BMO expects the central bank to raise again in July and then to pause.
Building permits dropped in seven provinces, with the biggest decreases in Ontario, Alberta and Nova Scotia, StatsCan said. The decline in those provinces was mainly due to a drop in non-residential permits, which had reported strong gains the previous month.
British Columbia and Saskatchewan posted the biggest gains on demand for multi-family dwellings and institutional permits, it said.
The stock market and the loonie shook off the weaker-than-expected data to rise, with investors regaining appetite for riskier assets and commodities.
