The value of building permits issued by municipalities increased 1.0% in October as construction intentions for single-family dwellings reached their second-highest monthly level in the last decade. Builders took out $3.3 billion worth of permits.

The value of housing permits rose 1.7% to $1.9 billion. Gains in both single- and multi-family dwelling construction intentions led the residential sector to a third consecutive monthly increase.

In the non-residential sector, permits totalled $1.4 billion, virtually unchanged from September, as a gain in commercial permits was offset by declines in the industrial and institutional components.

So far this year, municipalities have issued $33.3 billion in building permits, up 8.7% from the same 10-month period of 2000. This represents the highest level for the first 10 months of any year since 1989. Increases in both the residential and non-residential sectors induced this strong showing.

At the regional level, Montreal largely dominated the other metropolitan areas in terms of growth (in dollars) in the cumulative value of building permits. More than half the gains in the non-residential permits at the national level came from the Montreal area. Buoyant construction intentions for multi-family dwellings led the Vancouver area to the second largest increase among the metropolitan areas.

Permits for single-family dwellings advanced 2.0% to $1.4 billion in October. Since March 1990, this represents the second highest level for single-family dwelling construction intentions. Over that period, only the January 2001 level was higher.

Moreover, multi-family permits, which rose 1.2% to $503 million, also helped to push up the overall residential sector.

Advantageous mortgage rates and their positive impact on the housing affordability as well as shrinking rental vacancy rates for apartments are factors behind the residential sector’s strong performance since the beginning of the year.

Most of the advance shown in the residential sector came from British Columbia (+28.4% to $295 million) where residential permits in October reached their highest level since September 1997. Quebec also posted sizeable gain in housing permits (+5.6% to $317 million). The largest decline occurred in Alberta (-10.9% to $275 million) following three months of gain.

On a year-to-date basis, the value of residential permits reached $18.3 billion, up 7.4% from the first 10 months of 2000, in the wake of contributions from both the single- and multi-family dwellings.

Provincially, the largest advances (in dollars) in the cumulative value of permits were posted in British Columbia (+19.7% to $2.4 billion) and Quebec (+13.3% to $3.0 billion). Nova Scotia recorded the largest decline (-15.0% to $370 million).

Following two consecutive monthly declines, builders took out $1.4 billion worth of non-residential building permits in October, virtually the same value level as in September.

Several indicators help explain the continuing downward trend in the non-residential sector. According to Statistics Canada’s Business Conditions Survey, only 8% of manufacturers remained positive about the prospects of increasing production in the fourth quarter of 2001, an historic low. Also, the Conference Board’s business confidence index plunged in the third quarter.

Climbing vacancy rates for office buildings, as well as declining retail sales, could also negatively affect the non-residential intentions.

The value of commercial permits climbed 4.9% to $616 million, mostly as a result of stronger demand for office building permits. Despite the increase, October’s level was 17.1% lower than the average monthly level in 2000.

In the industrial sector, a strong gain in permits for manufacturing buildings was more than offset by a steep decline in the transportation building category. As a result, municipalities issued $333 million in industrial permits in October, down 1.7%.

Following robust results in September, construction intentions in the institutional sector dropped 4.7% to $450 million, led by a slowdown in permits for buildings in the education category.

Among the provinces, a large gain in the institutional component led Ontario to the largest advance (in dollars) in the non-residential sector (+17.2% to $610 million). British Columbia posted the most important retreat (-30.5% to $147 million). A substantial decline in the institutional category led non-residential intentions in British Columbia to their lowest monthly level in 11 months.

On a year-to-date basis, the value of non-residential permits totalled $15.0 billion, up 10.2% from the same 10-month period in 2000. It was the strongest performance for any January-to-October period since 1989. Most of the advance in the cumulative figure came from a strong 35.3% surge in institutional intentions. A lesser contribution came from the commercial component (+6.0%), while the cumulative value of industrial permits was down 3.5% from the same period in 2000.

Propelled by the outstanding growth in the Montreal area, the largest advance in the non-residential permits (in dollars) among the provinces occurred in Quebec (+33.4% to $3.4 billion). Ontario placed a distant second (+5.6% to $6.1 billion), due only to substantial gains in the institutional category. The largest retreats were in Nova Scotia (-33.8%) and Manitoba (-25.0%).