The value of building permits issued across the country edged up marginally in April, as construction intentions for new housing plunged to a 10-month low and permits for non-residential projects rebounded sharply.

Municipalities issued $3.7 billion in building permits in April, an increase of only 0.5%. Housing permits fell 6.8% to $2.3 billion, while intentions in the non-residential sector increased 14.8% to $1.4 billion, fuelled by permits for institutional projects.

Despite the slight overall increase in April, the value of permits issued in the first four months of the year reached a record high, thanks to torrid activity in January. Between January and April, municipalities issued nearly $15.6 billion in permits, up 4.6% from the same four-month period last year.

The year-to-date value for housing permits also hit a record high, $9.8 billion, a 2.1% increase. The four-month level for non-residential permits rose 9.1% to $5.7 billion, the second best four-month start in a decade.

Provincially, the biggest gains were in Manitoba, where the value of permits far more than doubled (+163%) from March to $219 million, the hottest month in over a decade. This was the result of two major hospital projects. Permits in Saskatchewan surged 134% to $90 million.

In contrast, the value of permits issued in Ontario declined 9.4% to under $1.5 billion, an 18-month low. British Columbia gave up some of the gains of last month marking a 13.6% decline to $480 million.

The census metropolitan areas recording the greatest gains were Montreal (+29.0% to $443 million), followed by Winnipeg, and Regina. The biggest declines were in Toronto (-11.9% to $611 million), Vancouver and Quebec.

Residential: Sharp declines in both single- and multi-family permits

The value of permits for both single-family and multi-family dwellings declined sharply in April.

Municipalities issued $1.6 billion in single-family permits, down 6.1% from March, the third consecutive monthly decline. However, cumulative values for the first four months of the year still reached a new record of $7.1 billion, which was 0.6% higher than last year.

Even more marked was the monthly decline in multi-family permits which fell 8.6% to $645 million.

Weakness was spread over the three sub-categories, with double homes showing the greatest decline -(21.8%), followed by apartments (-6.6%) and row houses (-4.4%).-

Even with April values less than the monthly average for 2002, multi-family permits set a new year-to-date record of $2.7 billion, up 6.3% from 2002.

Municipalities authorized the construction of 16,500 new dwelling units in April, down from the 16,962 issued in March. The bulk of the decline was attributable to a slip in single family units. So far this year 69,867 units worth of construction intensions have been expressed, 2.2% lower than the same period last year.

A number of factors may have contributed to the moderation in seen April’s numbers. Mortgage rates appear ready to remain low for some time to come, so there has been less pressure on consumers to rush to secure financing. The past two years have seen permits issued at a feverish pace, and the pent-up demand might be easing.

In addition, the desire among builders to push the sale of new units may be cooling as they concentrate on finishing projects already on their order books. Some builders have noted difficulty in achieving reasonable delivery time frames, given labour force constraints. Also, according to the Labour Force Survey, construction employment was up 50,000 from April last year, an indication of significant level of work already underway.

On a provincial basis, Saskatchewan experienced the greatest increase in permit value from March (+166.6% to $47.6 million), chiefly as a result of an increase in permits for apartments. After recording a jump in March, British Columbia recorded the greatest monthly decline (-28.0% to $317.4 million).

A $99-million drop in single family permits issued by Ontario municipalities could not be offset by additional demand for multi-family residences pushing that province to the second greatest monthly loss (-7.1% to $985 million).

Non-residential projects rebound after two monthly drops

April’s rebound in non-residential permits followed two straight monthly declines, and was led by a strong increase in the institutional intentions. April’s level was 14.8% higher than last month, reaching $1.4 billion.

Institutional intentions increased 79.7% to $500 million. Most of this activity came from social service building, medical and hospital and educational projects.

The greatest increase (in dollars terms) for institutional intentions was in Manitoba, were the value of institutional projects climbed from $3.0 million to $119 million due to two major hospital projects.

The value of commercial permits increased 3.4% to $703 million due to higher intentions in the office building and hotel and restaurant categories. The most significant increase in this component occurred in Quebec (+44.8% to $201 million).

Only the industrial component showed a decline in April, falling 20.0% to $239 million, the result of declines in the manufacturing plant category. This component experienced its third decline since the beginning of the year. Quebec recorded the largest drop (-57.9% to $38 million).

Concerned with lower levels of new and unfilled orders, manufacturers expect to decrease production levels in the coming three months according to Statistics Canada Business Condition Survey. Key factors influencing manufacturers' intentions included global uncertainty and the appreciation of the Canadian dollar.

At the provincial level, the most significant monthly increase occurred in Manitoba (+276.9% to $177 million) due to a large increase in the institutional category. In contrast, Ontario posted the largest decrease (-13.8% to $480 million) for the second consecutive month.

On a year-to date basis, non-residential building intentions reached $5.7 billion, up 9.1% following increases in all three components.

The year-to-date value for industrial building permits reached $1.2 billion, up 11.8% over the same period in 2002, followed by the institutional component at $1.7 billion, up 9.4%. Construction intentions for commercial projects also contributed to the advance, increasing 7.9% to $2.9 billion. According to Statistic Canada’s capital and repair expenditure survey, spending on capital construction (including building and engineering) in educational services and health care and social assistance is expected to increase in 2003. This is in line with the year-to-date results of the institutional component.

On a cumulative basis, strong increases in non-residential permits issued for Oshawa and Toronto areas led Ontario to the largest gain among the provinces (+7.8% to $2.6 billion). In contrast, the Northwest Territories posted the largest decline (-91.2% to $2.3 million) because of a decrease in the institutional component.