Canada’s July building permits:
July sectors compared with June:
The total value of Canadian building permits fell 17.3% in July to $12.2 billion, according to Statistics Canada. The result was considerably weaker than the 6.4% decline expected and nearly reversed June’s 18.5% increase.
The weakness was broad but was led by the non-residential sector, where permit values declined $1.9 billion to $5.0 billion. Institutional construction intentions accounted for most of that decline, falling $1.5 billion to $1.7 billion. Ontario led the institutional pullback with a $1.1 billion decline, followed by Quebec and British Columbia.
Industrial permits also declined $443.3 million to $795.5 million, with Saskatchewan, Ontario and Alberta leading the decrease. Commercial permits were the lone area of non-residential growth, rising a modest $41.0 million to $2.5 billion.
Residential construction intentions fell $701.2 million to $7.2 billion. The multi-unit component accounted for most of the decline, falling $531.8 million to $4.7 billion, while single-family permits declined $169.4 million to $2.5 billion.
Municipalities authorized 19,200 multi-unit dwellings and 4,100 single-family homes during July. The combined number was down 10.1% from June. Over the 12 months through July, 297,100 multi-unit dwellings were authorized, down from 308,200 during the previous 12-month period.
Quick analysis: This was a weak report. The headline decline was nearly three times the size expected and was not limited to one narrow residential category. Institutional, industrial, multi-unit and single-family construction intentions all fell.
Some of the decline represents a reversal of June’s unusually strong increase, particularly in large institutional projects. Building-permit data can be volatile because one or two major projects can produce large monthly swings. Nevertheless, the 2.2% year-over-year decline in constant-dollar terms and the drop in authorized housing units suggest underlying construction momentum was also softer.
The report could be marginally negative for the Canadian dollar and may reinforce a cautious Bank of Canada outlook. However, inflation, employment and consumer-spending data will normally have a greater influence on Bank of Canada policy expectations.
What this report measures: Building permits measure the value of residential and non-residential construction projects authorized by Canadian municipalities. They are considered a forward-looking indicator because a permit is generally required before construction begins.
The data can provide an early signal about future housing construction, business investment and overall economic activity. However, the monthly figures can be volatile, particularly when large institutional, commercial or multi-unit projects are approved
This article was written by Greg Michalowski at investinglive.com.
Source: Investing Live - News
