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64-001-XIE
Building permits
July 2003

Highlights

Municipalities issued building permits at a near-record pace in July for both residential and non-residential construction projects.

In total, they approved permits worth $4.53 billion in permits, up 3.3% from June and just shy of the monthly record of $4.59 billion in January.

The torrid pace of permits set a new record for the first seven months of the year. Between January and July, builders took out permits worth $29.5 billion, 9.0% higher than the same seven-month period last year.

Permits for housing in July hit $2.78 billion, up 4.7% from June and just short of the monthly record of $2.80 billion set in January. The value of non-residential permits grew 1.1% to $1.8 billion, its highest level since January. The major factor was a 56.7% leap in industrial permits.

Fuelled by very low mortgage rates, a favourable job market and income growth, these gains will likely keep the building sector humming for months. According to July’s Labour Force Survey, more than 933,000 Canadians were employed in construction, up 1.1% from the previous month and 5.4% higher than for the same month last year.

Among census metropolitan areas, the biggest monthly gains occurred in Montréal, where a buoyant demand for residential permits fuelled a 27.9% gain to $497 million. Vancouver followed with a 25.6% increase to $336 million largely due to multi-family issues. Permits in Calgary fell 52.5% to $169 million following explosive growth in June.

Third straight month of gains for sizzling residential sector

July’s increase in construction intentions in the housing sector was the third straight monthly gain.

Builders took out a record $950 million in permits for multi-family units in July, up 15.6% from June. This more than offset a decline in the value of single-family intentions, which edged down 0.3% to $1.8 billion.

On a year-to-date basis, permits for residential construction totalled $18.0 billion between January and July, up 6.0% from the first seven months of 2002. This consisted of a record $12.6 billion in single-family intentions, up 3.4%, and a record $5.4 billion in multi-family permits, up 12.6%.

Nearly 20,000 new housing units were approved across the country in July, of which 10,335 were for single-family housing. So far this year, permits for 129,000 units have been approved, of which just over one-half were single family dwellings.


Quebec experienced the biggest monthly increase in demand for residential permits (+35.1% to $626 million) followed by British Columbia (+16.2% to $401 million). Both the single- and multi-family sectors participated in Quebec’s growth. In British Columbia, the gain in multi-family permits more than countered the decline in single-family issues.

Ontario recorded the biggest monthly decline (-4.6% to $1.2 billion) as permits for single-family construction fell 11.6%, offsetting growth in multi-family permits.

Non-residential sector sustained by the industrial component

A major gain in proposed industrial projects propelled the non-residential sector to its third increase in four months.

The value of construction intentions for industrial buildings reached $449 million in July, up 56.7% from June. It was the highest level since September 2000. A large-scale manufacturing project in Quebec contributed significantly to the increase.

In contrast, the value of building permits in the institutional components tumbled 12.0% to $557 million. (A large project for a medical building in Alberta inflated June’s results.) July’s level was still 7.6% higher than the average monthly value in 2003, and 16.2% higher than the average monthly level in 2002, which was a banner year.

In the commercial component, the value of permits totalled $743 million in July, down 8.4% from June. This drop was the result of a 27.8% decline in projects related to trade and services. July’s level was the lowest in the last four months, and 6.3% below the average monthly level this year.

Provincially, the largest increases (in dollars) among the provinces occurred in Quebec (+17.4% to $434 million) and in British Columbia (+38.9% to $197 million). In Quebec, the high value recorded in the industrial sector pushed the non-residential component to its highest value in 2½ years. In British Columbia, growth in all three components led July’s value to its highest level since September 2001. In contrast, non-residential permits in Alberta declined 49.6% in July after a substantial gain in June.

The non-residential sector has seen mixed signals from recent economic indicators. Statistics Canada’s most recent Business Condition Survey indicated that manufacturers did not expect to crank up production in the next few months because of concern over higher level of inventories and lower levels of unfilled orders. Unfilled orders reached their lowest level in nearly six years in June after 10 consecutive monthly declines. Furthermore, the Business Confidence Index published by the Conference Board of Canada recorded its largest drop since the third quarter of 2001.

In contrast, consumer spending in retail stores advanced for a second consecutive month in June. Furthermore, according to revised data on private and public investment intentions, businesses, governments and institutions were expected to increase spending in 2003.

On a year-to-date basis, municipalities have issued $11.6 billion worth of non-residential permits, up 14.0% from the January-to-July period in 2002. This is the best start ever the non-residential sector.

The largest advance (in dollars) was recorded in the industrial component (+28.5% to $2.4 billion). The value of permits increased 16.5% to $3.6 billion in the institutional component, while commercial intentions rose 7.2% to $5.6 billion.

Non-residential permits so far this year have increased in eight out of 10 provinces. The largest growth (in dollars) was recorded in Ontario (+11.7%) due mainly to large increases in the three non-residential components in the Toronto. Growth in Toronto’s non-residential sector has been strongest of all census metropolitan areas.

Quebec was second (+19.3%), powered by projects in the institutional component in Montreal. Only Newfoundland and Labrador and New Brunswick showed declines.



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