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| Building permits
May 2005 Analysis – May 2005 The overall value of building permits fell for the second straight month in May, as industrial and commercial intentions declined and the value of housing permits remained virtually unchanged. Municipalities issued permits worth $5.0 billion, down 2.1% from April. The decline comes in the wake of a 2.2% decrease in April. Still, May's overall level was 7.0% higher than the average monthly level in 2004, a record year. The value of housing permits slipped just 0.4% to $3.1 billion, as a slight increase in the single-family component was more than offset by a decline in the value of multi-family permits.
Contractors took out $1.8 billion in non-residential permits, down 5.0% from April and the second monthly decline in a row since the record high of $2.2 billion set in March. Retreats in the value of industrial and commercial permits more than offset a gain in institutional permits. Non-residential construction intentions remain high despite recent declines, and the sector has been on an upward trend since the beginning of 2004. Builders took out $24.7 billion worth of building permits between January and May, up 14.2% from the same period last year. Permits in the non-residential sector surged 29.1%, while the residential sector showed a more moderate 7.0% increase. Among metropolitan areas, the largest advance in dollars on a year-to-date basis occurred in Calgary, driven by gains in every component of both residential and non-residential sectors. Toronto, Vancouver and Edmonton also showed marked advances from last year. Multi-family permits remain above one billion dollars Results in the residential sector have remained strong for months, and data for May were no exception. The value of multi-family permits declined 2.4% to just over $1.0 billion. But it was the fourth month since the beginning of the year in which construction intentions for the multi-family component surpassed $1 billion dollars. The value of single-family permits edged up 0.6% to $2.1 billion. Advantageous mortgage rates, growth in full-time employment and strong consumer confidence continued to have positive impacts on the housing sector. The strong housing market had spill-over effects on other sectors of the economy. Retailers in the building and outdoor home supplies sector and in the furniture, home furnishings and electronics sector showed record sales in April. Employment in construction also increased significantly in comparison with last year. Provincially, the largest gains in dollars in May occurred in Ontario and Saskatchewan. In Saskatchewan, the value of housing permits reached its highest value since December 1986. In contrast, Alberta and British Columbia showed the largest retreats. However, in Alberta, the value remained high as the decline was from a record high reached in April. The value of permits for single-family dwellings between January and May rose 3.9% to $10.3 billion, while the value of multi-family permits went up 13.6% to $5.3 billion. Since the beginning of the year, municipal authorities have approved 96,211 new dwellings units, a slight 2.0% decline from the same period in 2004. The two westernmost provinces showed the largest advances in the cumulative value of housing permits. The value of housing permits rose 25.0% in Alberta and 15.8% in British Columbia, compared with the first five months of 2004. In Alberta, the strong demand for new single-family dwellings primarily drove the gain, while in British Columbia it was the demand for new apartments/condominiums. The value of permits for new apartments/condominiums and row houses in Toronto also contributed to the growth in the cumulative value of construction intentions in Ontario. Non-residential sector: Declines in industrial and commercial permits Builders took out fewer industrial and commercial permits in May, while the value of institutional permits increased. After three monthly increases, industrial permits fell 14.6% to $338 million. This was largely the result of a decline in demand for utility buildings in Alberta. Industrial permits in Alberta plunged 59.0% to $59 million, the largest drop among the provinces. Permits in the commercial component fell 12.4% to $908 million, the second consecutive monthly decline and the lowest level since November 2004. All commercial categories showed declines except recreational buildings and warehouses. Ontario recorded the largest decline, the result of strong decreases in the office building and trade and services categories. Institutional intentions rebounded 19.3% to $564 million following a large decrease in April. Projects in the educational building category led British Columbia to the greatest increase (in dollar terms) among the provinces. The value of institutional projects in British Columbia nearly tripled to $109 million. Of the 28 census metropolitan areas, 17 recorded monthly decreases in the value of non-residential permits. Ottawa, Hamilton and Calgary recorded the largest declines, mainly the result of lower construction intentions in the commercial and institutional components. Among the provinces, Alberta showed the greatest loss in non-residential permits in May, down 25.7% to $282 million. Increased demand for institutional permits failed to offset declines in the commercial and industrial sectors. The strongest increases occurred in Quebec and Saskatchewan. For the first five months of 2005, the commercial sector experienced the greatest gain, increasing 34.2% from the same period last year to $5.1 billion. Permits for institutional projects rose 23.1% to $2.5 billion, while intentions in the industrial sector were up 23.0% to $1.5 billion. Despite May's decline, the value of projects approved in 2005 remains relatively high in the commercial sector. This is consistent with the upward trend in retail sales since the fall of 2001 and a declining office vacancy rate nationally. In addition, despite concerns about rising finished product inventories and lower order levels, manufacturers anticipated maintaining the same level of production in the coming three months, according to the latest Business Conditions Survey. Also on the industrial side, capacity use among industries fell for the first time in a year during the first quarter of 2005, even though the rate hit a record high in the manufacturing sector. On a year-to-date basis, Alberta recorded the biggest growth in non-residential permits (in dollars). Their value rose 83.9% to $1.7 billion, a record high for the January-to-May period. In 2004, this cumulative level was only reached in October. Among provinces, only Quebec and Nova Scotia failed to surpass year-to-date values from 2004. Chart 1
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