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64-001-XIE Building permits August 2003 |
Highlights
Construction intentions cooled off in August as the value of building permits experienced an across-the board decline in both housing and non-residential sectors. Municipalities issued $4.1 billion worth of permits, down 13.4% from a revised level of $4.7 billion in July, which was a record high. Permits for housing declined 8.3% to $2.6 billion, halting three straight monthly gains. Intentions fell for both single- and multi-family dwellings. At the same time, the value of non-residential building permits plunged 21.1% to just under $1.5 billion, again with declines in all three components – industrial, commercial and institutional. (July’s value had been the highest in the last 14 years.) Despite the overall decline in August, the value of building permits, a leading indicator for construction activity, was 3.8% higher than the average monthly level in 2002, an exceptional year. Declines in August were widespread. Construction intentions for both residential and non-residential sectors fell in every province except Newfoundland and Labrador, Manitoba and Saskatchewan. In Alberta, only non-residential permits were down. On a year-to-date basis, municipalities issued a total of just over $33.8 billion worth of building permits between January and August, up 8.2% from the same eight-month period last year. If the value of permits keeps growing at this pace, 2003 should be a record year. In 2002, this level was reached in September, while in 2001, it was surpassed only in November. So far this year, housing permits are up 5.6%, while non-residential are up 12.7%. Factors behind the feverish demand for new housing this year include low mortgage rates, strong employment and the scarcity of existing dwellings on the market in several centres. These have had positive spin-off effects. For example, sales in furniture stores have increased 4.8% so far this year, while construction employment is up 3.6%. Toronto, Montreal and Quebec have shown the largest growth (in dollars) among the census metropolitan areas this year. An extremely active housing market is largely behind the growth in Montreal and Quebec, especially for multi-family dwellings. In Toronto, projects exclusively in the non-residential sector have driven gains. Halt to growth in single- and multi-family dwellingsDeclines in construction intentions halted three straight monthly increases for single-family permits, and five straight months of gains for multi-family. The value of single-family permits retreated 8.2% to $1.7 billion. Municipalities approved construction of 9,630 new single-family dwellings in August, down 9.3% from July. The value of multi-family permits totalled $899 million, an 8.7% decline from July. However, this level remained well above (+13.1%) the average monthly level since the beginning of the year. The number of new multi-family dwelling units authorized fell 9.2% to 9,115 in August. The demand for dwellings has apparently shifted from single- to multi-family. Between 1996 and 2002, authorized multi-family dwellings accounted for 38% to 41% of all dwellings. So far this year, they have accounted for 46%. At the provincial level, housing permits fell in seven out of 10 provinces, the largest in Ontario (-6.2% to $1.2 billion) and Quebec (-9.5% to $585 million). In both, the decline came largely from single-family dwellings. On a year-to-date basis, the total value of residential projects issued between January and August reached $20.7 billion, up 5.6% from the same eight-month period last year. Cumulative levels for both single-family dwellings (+3.0%) and multi-family (+11.8%) were higher than those during the same period in 2002. Between January and August, municipalities authorized 148,250 new dwellings units, up 3.3%. Strong demand for new dwellings in the census metropolitan areas of Montreal and Quebec led growth in the province of Quebec, which was well ahead of other provinces in terms of year-to-date growth in dollars (+23.1% to $4.2 billion). In contrast, the largest retreat occurred in Alberta. Non-residential: Plunge in intentions for industrial projectsAcross-the-board declines in the non-residential sector in August were led by a dramatic plunge in the value of building permits for industrial projects. After recording a major gain in July, industrial intentions plunged 46.8% to $263 million, the lowest level since June 2002. The manufacturing category was the largest contributor. Both Quebec and Ontario recorded large decreases in dollar terms. Intentions for institutional construction tumbled 22.1% to $467 million, with educational buildings showing the biggest drop. Quebec recorded the largest decrease (-53.5% to $48 million). In the commercial component, the value of permits totalled $734 million in August, down 3.7% from July. This drop was mainly the result of declines in projects related to hotels, restaurants and recreational buildings. August’s level was the lowest in the last five months, and was 6.8% below the average monthly level this year. The non-residential sector has seen mixed signals from recent economic indicators. The Business Confidence Index published by the Conference Board of Canada recorded its largest drop since the third quarter of 2001. In contrast, businesses, governments and institutions were expected to increase spending in 2003, according to revised data for private and public investment intentions. Regionally, 16 census metropolitan areas recorded monthly declines in the value of non-residential permits in August, the two largest occurring in Toronto and Oshawa. In contrast, a large gain in the institutional component led Calgary to the strongest increase (+149.1% to $104 million). Quebec followed (+185.3% to $65 million) with a surge in the commercial component. Provincially, the largest decrease (in dollars) among the provinces occurred in Quebec (-37.1% to $298 million) and in Ontario (-12.4% to $665 million). In Quebec, a gain in the commercial component was more than offset by declines in the industrial and institutional sectors. In Ontario, declines in all three components pushed August’s total to its lowest level since March 2003. On a year-to-date basis, municipalities issued just over $13.1 billion worth of non-residential permits between January and August, up 12.7% from the same period in 2002. Gains have been strongest in the industrial sector, where year-to-date levels are up 24.8% to $2.7 billion, and in the institutional sector, where intentions have increased 14.8% to $4.1 billion. The value of permits rose 7.0% to $6.3 billion in the commercial component. Non-residential permits so far this year have increased in eight out of 10 provinces. The largest growth was in Ontario (+8.5%), the result mainly of large increases in the three non-residential components in the Toronto census metropolitan area. Growth in Toronto’s non-residential sector has been the strongest of all among such areas. The province of Quebec was second (+19.3%), powered mainly by projects in the institutional component in Montreal and by projects in the commercial component in Quebec area. Only Newfoundland and Labrador and New Brunswick showed declines. |
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