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| Building permits
March 2005 Analysis – March 2005 The total value of building permits issued by municipalities reached $5.27 billion in March, up 4.9% from February and the second highest level on record. Businesses and governments planned to invest massively in the construction of buildings as the value of non-residential permits reached a record-high in March. The overall value of building permits in March has only been surpassed by the June 2004 level, when the value of building permits totalled $5.31 billion. The value of construction projects in the non-residential sector totalled $2.3 billion in March, a 38.7% jump from February. This level surpassed the previous record-high reached in August 1989 and was 50.1% higher than the average monthly level in 2004. Double-digit gains in the industrial, commercial and institutional components were behind this strong result. The non-residential sector has been on an upward trend since March 2004. The residential picture was quite different. Builders took out $2.9 billion worth of permits in March, down 12.2% from February, the result of declines in both single- and multi-family components. For the first time in 10 months, the $3 billion mark has not been reached in the residential sector.
For the first three months of 2005, the value of building permits totalled $14.7 billion, up 15.8% over the same period in 2004. While the residential sector contributed to this gain (+8.0%), it was largely the strength in the non-residential sector (+32.0%) that fuelled this growth. Regionally, the strongest gain so far in 2005 occurred in Toronto due to the advances in the non-residential sector and in the multi-family component. In addition to Toronto, the growth in the cumulative figures was strong in Western Canada where all metropolitan areas west of Winnipeg showed large increases in their value of building permits. Housing: The demand cools down The demand for new dwellings weakened in March as municipalities authorized the construction of 17,840 new dwelling units, the lowest number since April 2003 and far less than the 21,250 units authorized in February. The value of single-family permits declined 6.3% to $2.0 billion in March. The value of construction intentions for multi-family dwellings retreated 23.0% to $913 million as proposed projects for apartment/condominiums dropped. Despite the decline in March, the housing sector remained solid due to low mortgage rates and their positive impact on affordability, rising disposable income as well as strong consumer confidence. In contrast, weaker growth in employment as well as rising vacancy rates and a more balanced resale market for existing homes cooled down the feverish demand for new housing. The decline for the residential permits in March came largely from Ontario (-14.4%) and Quebec (-25.3%). Marked declines occurred in both single- and multi-family components in these two provinces. At $533 million, Quebec recorded its lowest level since June 2003. The results in British Columbia also showed a significant decline in residential permits, but this followed very strong construction intentions for multi-family dwellings in February. For the first quarter of 2005, the value of residential permits totalled just under $9.3 billion, up 8.0% from the first quarter of 2004. A substantial rise in the multi-family component combined with a more moderate gain in the value of single-family permits explained this strong growth. At the provincial level, 7 out of the 10 provinces posted gains in their cumulative value of residential permits. The largest gains occurred in Ontario, Alberta and British Columbia. Non residential sector: Boom in the three components The value of non-residential building permits issued by municipalities surged a blistering 38.7% in March to $2.3 billion, forging a new monthly record and breaching the $2 billion threshold for the second time. A record value in the institutional component combined with very high levels in the commercial and industrial components propelled non-residential permits above the previous record of $2.2 billion set in August 1989. Construction intentions in the institutional sector increased a spectacular 98.3% to $796 million. This growth was based mainly on strong construction intentions in the government administrative and the hospital categories. Alberta experienced the greatest increase as a result of a large project in the government administrative building category. The commercial component recorded a fourth consecutive monthly gain in March, a 12.6% jump from February. The value of construction intentions for commercial buildings reached $1.2 billion in March, just below the record set in August 1989. Gains were posted in eight of the provinces and territories in March. This surge was mainly due to higher construction intentions for hotel and warehouse buildings. Construction intentions for industrial projects rose 51.4% to $381 million in March, the result of large increases in the manufacturing and utility building categories. This was the second increase in a row and this level was 31.6% higher than the average monthly level recorded in 2004. Newfoundland and Labrador posted the most significant increase due to a large project in the utility building category. The excellent results for the non-residential sector are consistent with economic indicators. Excluding the transportation equipment sector, manufacturers maintained the strong pace seen in January with shipments edging up 0.3% in February. On the commercial side, strong consumer spending in most retail stores pushed sales above the $30 billion mark for the first time ever in February. Industries operated at 86.0% of their capacity, compared with 85.7% in the third quarter of 2004. A high capacity utilization rate could have a positive impact on the construction intentions for industrial projects. Of the 28 census metropolitan areas, 21 recorded monthly increases in the value of non-residential permits. The largest gain occurred in Toronto and Calgary, and the largest decrease was in Ottawa. Provincially, the largest increase (in dollars) occurred in Alberta where intentions were up 91.1% to $483 million. Increases in all three components pushed March's total to its highest level on record. On a year-to-date basis, municipalities issued $5.5 billion worth of non-residential permits, up 32.0% from the same period in 2004. All three components were up from last year. Year-to-date value in the commercial sector rose 39.4% to record almost a $1.0 billion gain, mainly due to higher construction intentions in the office building category. The value of permits for industrial buildings was up 7.2% while institutional construction intentions recorded a 32.8% rise. The year-to-date results are consistent with private and public investment survey intentions, which had forecast a 6.0% increase in construction investment (including engineering construction) for 2005. Non-residential permits so far this year have increased in all provinces except Quebec. The largest increase was in Alberta (+129.7%), where the commercial component gained an impressive 91.8% and the industrial component a spectacular 195.8%. Both components were up significantly from the same period last year as a result of the positive impact of energy resource development and the resulting diversification in commercial construction. In contrast, Quebec showed a decline in all three non-residential components. Chart 1
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